I don't have any experience with shellac bought in flake form but I am curious what would happen if you reconstituted them into a big mass. Bunch all of them together and heat them up. If this is successful perhaps the shellac can be used after all.
Get some self adhesive 3M tape and make some buff sticks. Don't use a mop as you'll round the edges. Get the equivalent of 200, 400 and 800 grit (I can't remember the micron equivalent, so look it up) and see how you get on by experimenting on scrap cases.
Looks very good to me.
The "noise" as opposed to a straight line is often inconsistency/un-evenness of the individual beats of the escapement. In my experience, this is due to cleanliness or lubrication (including over-lubrication) of the escapement. I'd still say it looks "ok". The other reason for the noise is if the watch pickup is not getting a strong enough signal.
But if you want to clean that trace up, I'd first ask: did you clean the escape wheel and pallets, are the pallet jewel holes clean, and are the pallet stones lightly lubricated?