The preload adjustment sets the ride height by putting in extra "space" into the top of the spring. Your weight plus passenger plus gears will compress the spring the same amount. It is the starting height set by the different notches. The suspension should be set to compress 1/4 or 1/3 of the total full movement range, let's say 1/3 ..... That way, you'll have 2/3 left to compress when you hit a bump and 1/3 of the movement downward when you ride over a big deep pothole. Add a passenger and gear, the weight may compress the movement to 1/2 and 1/2 and you may bottom out when hitting a big bump ... not enough compression movement range. You'll need to set the preload to "stiffer" (wrong word to use) to get the ride height back to it's rightful place.
Once the ride height is set correctly, then you pay attention to the damping. Compression damping and rebound damping. Not all suspensions have setting for both.
I am 165-170 pounds. The B1250 would kick me in my ass when I ride over a sharp bump. It literally launch me into the air. When I have a passenger or 150 pounds of gear, the compression damping is perfect. I ride over that sharp bump without a notice. Unfortunately, the B1250 have no compression damping adjustment, only rebound damping (in the rear).
On rebound, stock setting was fine. I ride over a big drop, a step downward on the road, or a big pot hole, the wheel comes down fast enough to meet the road so it is not like the rear wheel "crash" down to the road. So, the damping was not too much. If too little, AFTER hitting a bump, you get shot upward by the extending spring with too little damping to slow down the extension process.
There is lot more good stuff to read on this topic. Search the web. One article gives examples of what the compromises are for each type of adjustments. It is all about compromises. It is not a case of "If adjust this way is better, then more would be even better". There is always a price.
BTW, seems like you figured it out on how to get the adjustment done. I had to remove a bracket on the left side. I spray some white lithium grease onto the cam on the adjuster to get a smoother action.