However the cotyledons and the 2 pairs of true leaves are pointing straight up and not spreading out.

I experience the same thing under ??artificial? low light. However, with the same plant under sunlight?no problem at all. Your present light is quite low?..double it and you could well experience the same thing?..only to a lesser extent.

With the hydroton (clay balls) you could need Ph correction as they need to be Ph corrected before you start. Check your Ph before proceeding.

Hope that helps,
HMR