The texel scripts take into account what the width and height values of the TexTools toolbar are set to. This width and height values always represent your target texture size of what you are currently working on. So for example in your case if you want the final Texture for that asset to be 256 x 256 just define it in the…
Your "Before" unwrap looks better. I wonder if the script is not working correctly somehow? Also, it sounds like whoever gave you this art test either didn't think it through, or is expecting you to make a decision here on the texture size. If your object is only 32x40x80 units, there is no way that using a 1024x1024…