I think that's 0.0005 degrees, which is not that good. I would try two things: see if you can set the georeferencing/spatial adjustment to use a conformal/similarity transformation rather than an affine one. Conformal/similarity allows a single scale value in both x/y directions, so right angles are maintained. What might also help is to project the reference data to a conformal projection for the area--like the local State Plane zone and then georeferencing/spatial adjusting to it rather than to lat/lon.
Melita