The deal with "making sure that the screw is seated at the bottom of the guide" is pretty much the norm for these Japanese screw-style release mechanisms, but this is the clumsiest way of describing it I've seen yet. Basically, the further out that the inner screw "thread" is from being seated, the less thread engagement there is between the inner and outer threads. If you look closely at the little diagram in your manual, "incorrect" has the inner part of the adjuster, the "bolt" portion of this threaded arrangement, partially disengaged from the "nut" or outer part of the adjuster whereas the "correct" diagram has the threads fully engaged, meaning that the adjuster is as far retracted as it will go.
This really is S.O.P. for this type of adjuster, all Kaw triples use this same type of mechanism. You back the cable and the adjuster off and let/help the inner "screw" with the cable arm to fully relax or wind into the outer portion. Now, the threads are fully engaged and perhaps more importantly, the arm is slightly below 90 degrees, which means that when it starts actually turning to push the clutch plates, the arm will be working at it's best leverage. You then loosen the lock nut and turn the release screw, which is actually a threaded shaft, clockwise to take up the slack betwen that screw and the longer, inner rod. I usually tighten it until it lightly bottoms, then back it off 1/2 turn to provide some play- leaving it tight against the inner rod is sort of like leaving your foot resting on the clutch of your car, when the clutch is fully engaged you want a little play betwen the parts. Once the release screw is backed off that 1/2 turn, lock it down with the locknut and then set your cable to release and engage at the point you like best.
As to your worries about working on your bike more than you seem to have expected, and possibly seizing your bike, you sort of have to accept that these are pretty old bikes now and that they will take a bit more looking after than a modern bike. I admit to being a bit of an idiot with this, but when I buy a bike over 20 years old, I do a very thorough front to back inspection, looking for worn bits and parts, and I always end up replacing something, regardless of how nicely the bike was maintained or how much I paid for it. They're just older mechanical devices and things wear just through age. These are great choices, however, for an older bike, especially for a 2-stroke, and anyone who's bought a Kaw Triple in the last 10 years will agree that those darn things are made of poor quality green cheese and there's usually a whole bunch of stuff to fix when you first buy one. T500s are probably the most reliable large 2-strokes ever made and if you do that stem-to-stern inspection and replace any parts that look marginal, weepy, loose or worn, and keep your oil tank full and clean gas in your tank, your T500 will not let you down. My road/touring bike is a '74 GT750 with 138K on the clock and I take it all over the country without hesitation. The T500 is basically a GT750 with 1 less cylinder and no water cooling to worry about. Get it right, then ride it!