Is this bad?

Select the output taps based on sonic's. Electrically it won't make much difference unless your speakers have a significant minumum impedence, in which case the 4ohm taps will probably sound best (control the bass).

The tube issue you mention is totally independent of the tap issue. You have either a bad tube or a biasing issue I suspect. It could be either. Are these new tubes or have you been using them for a long time and one is just now acting up? Have you checked the bias on these tubes lately?

The amplifier was a recent AudiogoN classifieds purchase. The seller indicated that the bias was set just prior to packaging. The tubes are fairly new.

Do you know how to bias the tubes? If not you should find out and check the bias on the tube. Perhaps the distributor can give you this information if your don't have a manual.

You could have a potential major tube failure in your future which might damage some amp's resistors. Unfortunately I don't think just dropping in new tubes without re-baising is a thing you want to do either. I wouldn't recommend that you continue to use the amp until your solve this issue.