20 degrees seems a rather large variation indeed; but also consider that, close in, 20degrees will not be much distance as the error is angular. To answer the OP's question, I reckon that's unacceptable - I'd be inclined to suspect there's something not right with the ADF.
It's interesting how perspectives vary; In my experience they're very accurate, though you need to be aware of things like coastal refraction, and terrain effects. Perhaps less relevant here, but having recently done a big trip around Aus, found it the single most useful nav instrument in the cockpit. From 10k-ish you could often get them at far greater distances than published, and much further away than VOR's - yes, you can't rely on them at those ranges, but the extra needle saying 'roughly thataway' is comforting, particularly in big open spaces. Also useful for 'inflight entertainment' (music radio), and NDB's are more common (certainly out there) / easier to maintain / aforementioned music stations can double as navaids (indeed their ersa lists co-ords of said music stations and frequencies). However, the thing does require a bit more wit to use.