This is the normal fret spacing for a dulcimer (although some folks add an extra fret between the 6th and 7th, a 6+ fret, to make a major scale starting from the open string.)
I have always used 5 string banjo strings on my dulcimer. Mine has a double melody string and I use the 1st and 5th banjo strings for this course. I put the 2nd banjo string on the middle course and the 4th on the bass course. Needless to say, I've accumulated a pile of banjo G strings over the years.
Many folks who started in the fifties and sixties by listening to Jean Ritchie use the DAA tuning, since this is what she used primarily, but these days, DAD seems to be a more common tuning. I still like the DAA tuning myself.