If you pull the caps off the forks the spring retainers should be under some tension, say about 1/4" to 1/2" tension. That is, the amount the spring has to be compressed to be at the point the retainer holds it.
I believe this translates into about an inch of sag in the front end for just the bike's weight. Little or no retention on the retainers is too little, and well you get the too much side of it. Cutting or adding a longer PVC pipe spacer is how you adjust the front spring preload.
You may want to pop in Jer's forum for more advice.
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TexKDX