And I could allocate it so that there is almost certainly a god, or even so there is certainly a god. That wouldn't be a good idea though, would it?

There isn't single "solomonoff induction", choice of the machine is arbitrary and for some machines the simplest way to encode our universe is through some form of god (the creator/owner of a simulation, if you wish). In any case the prior for universe with god is not that much smaller than prior for universe without, because you can obtain a sentient being simply by picking data out of any universe where such evolves. Note that these models with some god work just fine, and no, even though I am an atheist, I don't see what's the big deal.

Also, the speed prior looks bad. It predicts the universe should be small and short-lived. This is not what we have observed.

The second source of problems is attribution of reality to internals of the prediction method. I don't sure it is valid for either prior. Laws of the universe are most concisely expressed as properties which hold everywhere rather than as calculation rules of some kind; the rules are derived as alternate structures that share same properties.