Gaps between aluminum frame and drill holes

Hello all. I am in the process of replacing a few windows. I ended up getting simonton daylight max to replace aluminum windows. It seems that the original frame was deep so after I inserted the window, there was only about 3/4" depth remaining from the edge of the original frame to the edge of the new window (image 1).

Is it OK if I screwed the vinyl frame through the original aluminum frame? I am not sure if that is best practice. There were no premade drill holes so I had to drill my own using a countersink.

Also some of the windows have about 1/2" gaps remaining as shown in image2. Should I put insulation inside the aluminum frame as well the outside of the frame? Or should insulation only go on the outside of the frame flush up to the vinyl window? I am not sure what the "best practice" is for insulation.

Thanks everyone!

Hard to see the bigger picture and get orinted.
Post some shots at two to three feet.

+1. It is difficult to make out exactly what is going on there.

It needs a famous finger pointing at it....

Oops! Sorry about that. I hope this picture helps. The arrow I drew (yellow) is about 1/2" long. With that small amount of working space where would I place the screw holes in the window? Currently I drilled the screws through the current aluminum frame. Is that OK to do?

And regarding the gap you see in the picture between the window and aluminum frame, do I put insulation in the gaps and fill in the space between the flange and frame? Or do I only apply it in the area where the blue arrow is, that is outside the aluminum frame?

I hope this makes sense. Thanks.

Fill the dark gap (i.e. not the whole blue line just the left part of it) with foam or sealant.

The area of the yellow line would normally be trimmed out with some casing or a stop of some sort.