It looks like my rear springs were installed upside down. The bottom of the coil is completely compressed. Also, the writing is upside down :P. I've noticed a clunking noise in the area when going over bumps. Could this be the spring coils slamming together? And is this something that should be corrected?

 

spring orientation shouldn't make that much of a difference.
what you're hearing is most likely the strut mounts needing replaced.

 

its possible that old strut.mounts cld make such annoying noises? i thought worn mounts cause sagging of the car?