It doesn't appear to be planted too deep. The graft union appears to be above the tanglefoot band on the tree. These dwarfs are just that, very dwarf. Nothing you can do about that now. A better cage around the tree would protect from coon or squirrels the most likely thieves. Both are still issues on full size 10-15ft tall peach trees.

The standard size trees do generally have better fruit. If you have room try a standard tree. They can be pruned to remain at 8-10ft tall.

Yes, it is planted too deep - what is called "telephone poling". It should be planted so that the root flare - that area where the trunk widens into the root spread - should be at or slightly above the soil grade. It doesn't matter where the graft union is if the root flare is buried too deeply. You need to dig and lift. The best time to do this is when the tree is dormant so already too late for this season. You can do it now but risk shocking it rather significantly. And you do need to raise it up - too deeply planted trees will fail to thrive and eventually die.

Without knowing the cultivar and the rootstock it is grafted to, its hard to say how big the tree should be. There are true genetic dwarf nectarines so maybe one of these and if so, growth looks perfectly normal.

It looks like you put the mulch next to the stem. The best way to apply mulch is in a donut shape. Keep the mulch back 3 or 4 inches. Agree with fruitnut, you have a true genetic dwarf. Also agree that trying to raise the tree could cause more problems than it would cure.

Be careful if you buy a semi-dwarf nectarine. It would be on citation rootstock that does not do well except in the west coast. It is easier to buy a standard peach tree and summer prune it to keep it the height you want.

Possums are another fruit thief. You can buy live traps to relocate the thieves. Check local ordinances to make sure it is legal. The biggest set back would be if a skunk was stealing the fruit. No good way to get them out of the trap.

Thanks for the advice, guys. That stuff that looks like mulch is actually just part of the compost that's mixed in with the soil. I'll try digging down a bit near the trunk to see if I can find the root flare. Would it be possible just to lower the soil around the tree instead of raising tree itself? Would that cause less stress? I would have gone with a full size tree but at the time I thought I'd be moving in a couple years and wanted something that would grow fruit more quickly.

Yes you can lower the soil. But I won't want a hole where water collects. If your soil drains well the water won't be an issue. So it depends on your soil, climate, and both internal and surface water drainage.

Again your tree looks good to me for a genetic dwarf. It might be best to leave well enough alone.

So it looks like the root flare is only 1-2 inches down. The soil drainage is pretty good, I think. Would be OK to lower the soil a couple inches now or should I wait until the dormant season? Any general advice on lowering the soil?

I also just notice a few leaves that have peach leaf curl which is a real bummer because I sprayed the tree last month hoping that would prevent it. Maybe I did it too late, though, as a few of the bud were almost getting ready to open. Is it possible it will be restricted to only a small portion of leaves or is this something that will spread, if present at all?

Just rake the soil away. Any roots you may expose can be covered with a light layer of mulch but avoid mulching right up to the trunk.

It depends on where you are located as to the proper timing for the spraying for leaf curl. In my area, which has warmish but pretty wet springs, It is recommended to spray three times at 3 week intervals beginning in February. Just omit or delay any spraying while the tree is in flower.

Move just enough soil so the water does not drain towards the trunk. It looks like that would not take much soil. Lowering the overall mound 1 to 2 inches would damage roots and hurt the tree. Dwarf many times have limited roots and damages them will lower the overall vigor of the tree even more.

As long as water does not puddle against the trunk, nothing else would need to be done.

Thanks again for all the helpful advice, guys. I just raked back a bit of the soil around the trunk and put down some straw, hoping that will prevent water from pooling in the middle. When I raked the soil I did run into a few VERY thin roots that I'm not sure were even connected to the tree. I hope my roughing them up didn't cause any damage. Overall, the tree looks a lot better and happier now. My next step is fencing it in to keep the critters out. It probably is opossums. I've seen them climbing over our fence at night in the past. I'd rather just make a cage/fence for the tree than try to catch them.

I've also had a real problem with ants climbing up the tree and farming aphids that feed on the new leaves. I had to remove the Tanglefoot when I was working on the tree and will reapply it. It keeps the ants away but getting it on is a real pain. I have to crawl under this tiny tree and the usual method of wrapping the paper strip around the trunk doesn't work because the bark is not smooth and creates gaps under the paper that the ants just crawl through. So what I've been doing is putting a piece of duct tape around the trunk and putting the Tanglefoot on that. I don't really like taping the tree, though. I considered putting the goo directly on the trunk but I've heard that's not good either. Any other possible advice on that? Blocking up the gaps under the paper with cotton and what not is difficult as I have do do all of this while practically lying on the ground and straining my body. Ugh.

That's an easy one, buy Lady bugs or even better lace wings. lace wing larva are called aphid lions for a reason.