Is there any reason why you're using an adjustment layer? What happens if you apply it directly to the precomped layer?
Also, what happens if you create solid colour in Photoshop and use that as a replacement for the AE solid?
That thing with the grey not working may be inherent in the channel math - it's "neutral" and all its values will zero out when recombined. There is literally no difference between neighboring pixels to determine any fancy color distorsions. The rest seems somewhat odd but I'm not sure if Twitch isn't doing some odd Alpha processing or more to the point no Alpha processing (never used it). That might actually also figure in into your first issue - it uses the full comp dimensions, not the real transparency...
Thanks for the help that actually worked better haha. I was thinking an adjustment layer would be better because it would be adjusting the whole image and not just the solid and the text.
I found the reason it wasn't affecting the solid. The original solid size was 1920x1080 so I just scaled it down so that it would work for a lower third. I had to switch the border behaviour to expand because it was looking at the edge of the solid as the size limit of the effect therefore only affecting things that are inside it. Setting it to expand made it the twitch effect the whole comp. Thank you for the help.