The results from NORM.DIST are correct... if you directly implement the Gaussian function in your sheet using:
=(1/($F$8*SQRT(2*PI())))EXP( -((M3-$F$7)^2)/(2$F$8^2))
which is an implementation of the standard Gaussian function e.g. f(x) on:
http://mathworld.wolfram.com/GaussianFunction.html
then the results exactly match Excel's NORM.DIST built in function.
When you say the values "should be" in range 0.2-0.4 I'm not sure you can be correct, because you have a Gaussian distribution with mean=261.6379 and std. dev=164.8153. That is a very widely stretched Gaussian distribution, and remember the area under a Gaussian must always sum to 1, so it makes sense that the values you're using i.e. range [-200,200] falling within around 1 standard deviation will be very small under that density function.
Put another way, the maximum value you will find under a Gaussian distribution will be at it's mean. Your mean is 261 so if I put 261 in your column titled "X" (column M) I will get the largest possible value I can hope for. This is 0.002. And you say you are expecting values 0.2-0.4. This is impossible given the standard deviation (164) you are using. If your standard deviation was 100 times smaller you might be getting towards that kind of value.