Sandbox mode should definitely be disabled. Are you adding the URL for the Privacy Policy in the Facebook Developer area or using Autotune? Either should work, but that will help us understand what might be going wrong. Also, for the URL, make sure you've included the full path (eg.
yoursite.com/privacy-policy). Save that and then try to disable sandbox. Don't do both in the 'same save'.
As for the Read Action, showing up in the Activity log is the most important. Reads won't usually post on the user's Timeline due to recent changes by Facebook for 'automatic' type actions, like reading, listening, watching, etc. However, they are still used in the Ticker and can show up in friends news feeds for what that user is doing. All you can do is look at the Activity Log to make sure it is actually working.
Hope that all explains, but as always, if not, let us know.
Thanks,
Alex