1. the line must go over the spear and hold it in place in the guide at the muzzle.
See the images bellow, different gun, but you will get the idea.
In your case (i see the line release is on the left?) You want to have your line go UNDER the right side forward facing prong, turn straight up and go over the spear, then down under the left side prong and back to the line release.
2. the line from the spear, should be a 1.5 to 1.8mm monofilamente, (fishing line) with the correct sized crimps. The line is usually about about 2x the spear length, then ties onto the gun via a bungee.
This is a very long thread but try to read through:
http://forums.deeperblue.com/beginner-hunting/64504-dummies-guide-rigging-speargun.html
3. You can smooth out the wishbone location grooves in your spear and try dyneema wishbones to stop that hacking up, but a little bit of sanding on the present metal wishbone would probably help too.
4. Try just one band. How thick is the spear? I have never seen double bands on a spear with the wishbone grooves (as opposed to shark fins) but thats probably just me. If the spear is less than 7mm those double bands will make it wobble on firing.
5. Assuming the gun has a "U" guide along its length, that the spear sits in, when the gun is loaded (in water only!) does the spear sit flat in the U all the way along? Can you press it down? It there is a gap the spear could be bent. You can also hold the tip against something hard and rotate it, looking down the spear. You will see it wobble if bent.
Why not take the gun to a local spearo or dive shop, most spearos love to help others.