The non adjustable Showas (revalved and resprung with proper sag) I put on my M800 will push the sliding indicator o-ring tight down to the casing on the bottom bracket in a pothole (bottom out) but in normal hard braking, bumpy road riding I usually have about 5-10 mm of free travel left down there. Looks to me like you're wasting a lot of your front travel... plus if the rear is the stock Sachs there's a good chance the spring is too soft (unless you're < 170lbs with gear) causing the rear to squat. Wouldn't that, combined with the uncompressed front, just aggravate issues caused by the already butt heavy attitude of the monster?
Lets say you had the preload right for static setup. If you increase rebound damping, might you need to increase compression damping to 'slow' the fork down and reduce the possibility of packing-down?
You might, but only if you actually experience "packing." I'm far from an expert, but all suspension tuning stuff I've read always stresses making small changes, ONE thing at a time and testing the effects on a set course so you can actually observe the results.
I'm trying to tune out an unpleasant 'weave' in fast corners, hence my interest in suspension.
That "weave" all but went away when I put on a Penske double clicker and raised the rear significantly. If you haven't raised the rear I would suggest experimenting with that before trying to tune it out with suspension settings. Clip-ons will also help get more weight on the front.
and Showa front forks with preload only.
IMHO it would be well worth your while to have your forks set-up for your weight/riding style by one of the suspension outfits like Traxxion, Race Tech, GP suspension. I had mine done at GP Suspension and it's the second best money ever spent on my M800. First best was the Penske rear shock...
And as always, remember this advice is worth what you paid for it ;D