I started out playing on a beaten up old classical style guitar because, well it was all I had. I don't play classical style music on it but basically what you would play on any normal acoustic..

Then I bought a western style steel string about a week ago and I have totally regressed in my playing.
I knew there would be a transition period because of the tougher strings and narrower fretboard, but I feel like a complete beginner again. Is this normal?

I can't barre properly, my chords don't ring out clean and my fingers hurt like a motherf... (this will probably pass - need to build some tougher callusses )

I guess I just need some reassurance that this is normal and not because I bought some totally unplayable guitar..

The action does seem high to me (about 5 mm on the 12th fret) but I don't know how high it usually is on a steel string?
"To Talk Without Thinking Is To Shoot Without Aiming"
there is more tension on the strings of a steel string guitar so that make it harder to fret
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hmm sounds fine to me. 5 mm maybe a tad high but i wouldn't really worry about it. i played on a classical guitar for years then i held an electric for the first time after 2 years of playing only with the classical acoustic. needless to say i felt like a beginner on the electric too, but after playing with it for a week or two i felt very comfy playing it. just a matter of getting used to something new i guess. i think you'll be fine.
I can tell you from experience the hurting hand is normal, just take breaks when it gets painful. It wont take long before you get used to it. Im not looking at a ruler but 5mm sounds too high, take it to the music shop you bought it from and have them set it up for your specifications, they should do it for free.