You didn't say whether your sight issue was the bullet hitting too high at 40-50 or too low. (my guess would be hitting too high). Any of the heavier bullets 280gr and up will probably leave you without enough sight adjustment.
If that is the case then you need a higher front sight.
Bowen Classic Arms makes a taller front sight for the SBHH for $40.
http://www.bowenclassicarms.com/parts_store/front_sights.html As for zeroing, that is really a question of your shooting ability.
I have a red dot on my SBHH and like the gun zeroed at 100yds. This gives me a point blank range of about 120yds so no hold over/under is necessary out to my max hunting range....point and shoot.
With iron sights I am not nearly as good but would think that setting your zero at 50yds is probably good to get started with.
For sighting in I actually prefer to do it at a shorter range (25yds) and adjust the POI to be about 1.7" high. This will ensure that at 100yds my POI is dead on (physics ensures that). This method also takes most of the wind effects out of your sight adjustment. Shooting some at 100yds should confirm that.
A trigger job is also highly recommended. The factory trigger on my SBHH was pretty heavy and gritty and accuracy suffered.
After the trigger job, it breaks cleanly at 2.5lb and now 100 yards is doable.