[This answer is based on OP's pictures and comments about what worked in the end]

The fork has IS brake mount interface, the brake caliper is for PM (post mount) interface. An adapter to keep them together is required.

IS/PM adapters come in many variants. The main difference between them is the disc diameter difference they dictate. Just a few examples (the image taken from one of discount retailers) of visual differences between such adapters is demonstrated below. Compare No. 1 — No. 3 (No. 4 seems to be a PM/PM adapter):

An adapter marked as "+0 mm" incurs no difference in disc size. That means, if the wheel has 160 mm disc installed, it will work a fork meant to have 160 mm rotors and with +0 mm adapter. An adapter marked as "+20 mm" will require 180 mm disc to match the rest of the same setup.

Now, the trick is that the same IS/PM adapter part can provide two offsets, depending on the direction it is installed.

Compare two pictures from the @MT247 question and comments.

1. Adapter installed in the +20 mm position. The caliper sits too high relative the the disc, resulting in very little overlap between surfaces of brake pads and the 160 mm disc.

Such setup would be appropriate for a 180 mm disc but not for the 160 mm one.

2. The same adapter reversed and installed in the +0 mm position. The caliper allows the whole surface of brake pads to touch the 160 mm disc when braking.

Obviously, an 180 mm disc would not even fit, pressing into the internals of the caliper in this case.

Another, very confusing, culprit is that the same adapter should be installed in reverse in the back of a bike compared to how it is installed in the front! That is, to work with a 160 mm rear disc and identical caliper, an identical IS/PM adapter may require to be installed in the +20 mm position.

The key here is to carefully read the manufacturer's installation instructions and use common sense when inspecting the brake setup: brake pads and the disc must overlap over the whole area.

[This answer is based on OP's pictures and comments about what worked in the end]

The fork has IS brake mount interface, the brake caliper is for PM (post mount) interface. An adapter to keep them together is required.

IS/PM adapters come in many variants. The main difference between them is the disc diameter difference they dictate. Just a few examples (the image taken from one of discount retailers) of visual differences between such adapters is demonstrated below. Compare No. 1 — No. 3 (No. 4 seems to be a PM/PM adapter):

An adapter marked as "+0 mm" incurs no difference in disc size. That means, if the wheel has 160 mm disc installed, it will work a fork meant to have 160 mm rotors and with +0 mm adapter. An adapter marked as "+20 mm" will require 180 mm disc to match the rest of the same setup.

Now, the trick is that the same IS/PM adapter part is asymmetric and can provide two offsets, depending on the direction it is installed.

Compare two pictures from the @MT247 question and comments.

1. Adapter installed in the supposedly +20 mm position. The caliper sits too high relative the the disc, resulting in very little overlap between surfaces of brake pads and the 160 mm disc.

2. The same adapter reversed and installed in the +0 mm position. The caliper allows the whole surface of brake pads to touch the 160 mm disc when braking.

Another, very confusing, culprit is that a different adapter should be installed in the back of a bike compared to what is installed in the front! That is, to work with a 160 mm rear disc and an identical caliper, a different IS/PM adapter may be required.

The key here is to carefully read the manufacturer's installation instructions and use common sense when inspecting the brake setup: brake pads and the disc must overlap over the whole area.