Copying color negatives with camera

OK, so that doesn't look too bad. The first hurdle is to do ALL your image processing in RAW. Doing it in JPEG will severely impact the accuracy of your final image. Once you import your corrected WB RAW file into a processor, use the white balance tool there again also, and select a white point by clicking on a couple of different points on your orange mask. That will essentially 'subtract' the orange from the whole image, leaving you with a true negative. After selecting your white point, you can invert the image (still in RAW) and it should look like a pretty good positive already. Then adjust colours and contrast and you should be done.

I seriously advise setting up your apparatus so that the film plane is as close to parallel with your sensor plane as possible. Then bring your aperture down to f/8 to f/11 at the most. At f/25 you will be severely diffraction limited. I would also advise adding some white paper behind your diffuser to kill some of the brightness of the flash, or move the flash further back.

Regarding resolution, I don't intend to start a flame war, but there is no limit to the resolution you can achieve; you can scan it at 500 MP if you want.  In my experience, I have found that going past 16 MP is not worth it.  12 MP suffices for 100 ISO film and if you're shooting Velvia 50 (slides, I know, not negatives), you can probably get ~16MP of usable resolution, assuming you shot your original at a good aperture, without camera shake, and used an excellent lens.  Go past that and you will only further enlarge the grain and get massive file sizes with no visual benefit.