How do I increase accuracy?

Four ways, and you're already using one of them.
ATG: you're already using this.
Speed: core factor, and your missile is a bit lacking there.
ECCM: helps a lot if the enemy has ECM. If you have ECCM? (If you don't you should consider it important research.)
Retargetting: means your missile can keep attacking until it hits - but since that means running through point each time it's not so great for anti-ship missiles.

I'd consider the accuracy unfortunate - against a lot of targets you're going to be simply missing with most of your shots. (Especially if they use missile jammer ECM.)

I ususally use 4-500% power boost on missiles.
Not multiple warheads but warhead strength technology , if you get 2 pts of damage per msp or 5 pts of damage makes a big difference in how much damage a missile should do

One Big thing. Get it to size 10 or 11 at the moment you need a size 11 launcher to fire this missile .
It seems slow but has a big warhead, so maybe less warhead and more engines. It depends on what your warhead and engine boost technologies are

it may be worth going to a size 6 ASM as Active Sensor range is calculated as any size 6 missile (or smaller)
so its detection range is the same as a size 6 missile anyway (assuming its own sensors and thermal signature are similar

or did that change in 3.5?

You may be right but retargeting and ECM equipped missiles takes up a lot of space so the missile would be going slower, nearer with a smaller warhead so overall I'd lean towards a size 7-8 ASM being the new "meta"/"optimal" ASM. But that's just my first thoughts with no solid numbers.

...Also when did Steve realize 3.5  (Yes I made this comment just to make this joke, no I do not have any regrets.)

Thank you all of the responses.   

I mean, at some point you're basically just flinging FACs at the enemy.

Speaking of: Steve, how about kamikaze ships?

Maybe I am about to ask a nonsensical stuff...    
What about shields on large ASM?
Is it possible? Did anyone try it? If so, can it be effective in reducing damages/destruction of missiles?

There are two issues with this:

• For passive defenses on missile in general, we had missile armor in VB6. The sense from Steve is that this didn't work well because it was either useless or a clearly best approach - for example, if a missile has 1 point of armor it can absorb twice as many AMM hits or 1-damage beam weapon hits, cutting in half any anti-missile defense efficiency, which is way too good unless the armor takes up half of the missile size. Basically, it did not create any interesting decisions (only a pure math optimization) so Steve took it out.
• For shields specifically, this would not work because smaller shields are extremely inefficient. A 5-ton shield generator (2 MSP) would require a base shield strength of 50 or 100 (depending on how rounding is handled) to give a single point of effective shield strength, and the highest tech level in the game right now is 15 I think. For a shield generator on a missile to have any effect it would have to be impractically large.