It is better for a little coolant to come out of the bleed hole. That shows you got as much air as you could out from underneath the thermostat. You can just wipe off the sealing surfaces with a paper towel before applying the gasket.

Regarding the drop in level in the recovery tank: That'* why we suggest you fill it above the hot full line. That drop is from air that the system expelled through normal cycling. After that first recovery tank fill, you want to bring the level up to the appropriate line and watch it very closely. After several expansion cycles, the level in the recovery tank should stabilize. If not, you have a leak somewhere.

brought it up about two inches above the hot and it now stabalized right at the cold line ...Thanks this stuff only gets easier with knowledge...shanks