Thanks for the replies! I tried to get better pics of the situation.
The first picture is from the outside, standing beneath the window, and looking up. You can see at the bottom, there's about 1/2" gap and there is a small chunk of foam also sticking out. You can also see up the left side that the gap gets smaller until finally disappearing all together near the top (that part is harder to make out).
The second picture is taken from the inside and shows the latch and window open. You can see the foam on the inside of the window sill.
The third picture shows the latch closed from the inside. My finger is pointing to the foam and gap. This is the same gap that can be seen from the outside.
There doesn't appear to be a way to adjust either the latch or the hook that secures to the latch on the window.