You are doing great! Most of my birds were older when I got them and some did not get much handling, but they did all come around eventually, so there is always hope.
Caging-we have something called craigslist here where people sell used things to each other, do you have something like that where you are? You are likely to find a nice cage for much less. As was said before though, clean it very very well and then rinse very very well.
Food-you are doing great there. It takes time for a lot of t hem to get used to new foods. The fact that he tries almost anything from your hand is awesome. He trusts you to give him things and knows they are not dangerous if from you. As far as the pellets, why not try grinding them down and putting a few in with his seed mix? He might try it then. You can also put multiple bowls in the cage. Sometimes a different way of putting in food can be interesting to them, even just a different bowl. You can also hang some veggies-like carrots and he can tear them apart, so it's a toy and food.
Beak dragging-my conure does this when excited. Sometimes when she is mad, sometimes just overly happy/excited. I know she's starting to get overly excited when she does a lot of beak banging, dragging and head bopping.
I am more likely to get bit during those times so we do mellow time for a few minutes.
Toys-those will encourage exploration. If you haven't given a ton of them start slow, they may make him nervous. Put one near the cage and play with it when you walk by. Start offering it to him. If he doesn't seem frightened hang it in the cage. You can buy a toy or you can make your own.
He's a beautiful bird and it's wonderful that you are trying to help make his life more complete and in the process getting yourself a new friend.
. Ill get him some chewing toys he likes destroying things 
