With the pickup lowered, they should not hit the teeth when fully extended. You may have some contact partially extended.
Do yourself a favor and pull the twine assembly from the baler (really easy to do), take it apart at the hinge points and cover everything in Neversieze. The twine arms kept getting lazy on my old 504L to the point they wouldn't move one day, those joints had enough corrosion built up in them that it was slowing down the linear actuator and eventually stopped it. There's plastic bushings in each one, just be careful not to tear them up taking them apart.
If you replace the razor blades before each cutting it'll eliminate 99% of your twine troubles - standard blades like the ones used in carpet knives, you can buy them at the hardware store. Buy American made blades, they'll last longer and cut better. Also knock the chaff off of the blade pivots periodically.
Vermeer will send you a full set of manuals for the baler for free if you call and give them the serial number for registration purposes. Best equipment manufacturing company I've ever dealt with.