I have the Progressive with the supplied spacers, just a hair over 200 myself so our settings should be close. I have the 2.5" (or whatever legnth they are) spacers installed and it's working well. I figured I ride on them first and them make an adjustment. And I wanted to keep my stock spacers...just in case I wish to return this bike to stock.
Depending on how long your stock oil has been in there....it's going to come out gray and full of metal powder. It's a natural result of our non-polished or harderdend fork tubes so don't be alarmed. The problem for me was that I did not have enough fork oil to sufficiently flush the old junk out to my preference. I'd recommed getting some extra to do the flush, or probably cheaper is to just use ATF fluid (aprox 7.5 weight oil) to get it all cleared out. Then add your actual fork oil.
On to oil selection. Higher rate oil stiffens the shock action and is for the street. Lower weight oil allows the shock to cycle easier and absorb the bumps. Now the stock oil is supposed to be 10W however I really don't think it is, seems a lot lighter like 7w to me. I went ahead and installed 15W with the progressives as I was planning a lot of street riding and it definitely tightened up the front nicely with a fork brace I think it's a great combo for the street. I plan on doing an fork oil change to finish flushing my forks and will go back to a quality 10W just to see how I like it, I'd like the front to be a bit more compliant than it is right now.
I also put in oil to 190mm mark I think, some go as much as 170mm. That is the distance from the top of the fork tube to the oil, no springs and the tube fully compressed. The less air in the tube, the less "bounce" as the hydralic fluid doesn't actually compress, the air is your other spring. Once the oil level is set, extend the fork, insert the springs, washer, spacer and then the cap. Tuning the oil level and weight is ultimately a very individual preference, once you get through it you'll see it's just 'fun time with the bike' to try different combinations.
Have fun with it and I think you'll be happy with the springs.