Two issues with a handmade dulcimer from 1969

I was lucky enough to have found an old hand made dulcimer at a guitar show a few years ago.  I cleaned it up and put on new strings, but have two issues with it.  1. The wooden string pegs keep slipping (tried all the usual fixes -stretching the string toward the peg key, pushing while I turn the peg, etc.) and 2. It appears that the staple frets are sitting about 1/16" above the fretboard.  I don't know if they were installed that way, or the wood has shrunk over the years.  I gingerly tried to hammer them down, but no luck.  Any ideas on either issue?  The instrument appears to be solid wood and sounds great, so I'd like to make use of it.  Thanks