125-200cc 02 wr 125 suspension setup..

Last fall i tried to adjust my suspension to the settings in the shop manual. and now i feel like i can bounce the back up and down like a basketball... im not to knowledgeable on suspensions, but does the rear shock require a charge of nitrogen? and does anyone know how much.. im curious if this wil fix the rear "bounce" effect.... also in the shop manual that it says to take a measurement from the top of the forks to the clamps.. is there a recomendation? and or what does this affect when you change this... thank you for any info and advice

Look for an oil leak at the shaft seal. Sounds like it has no damping,which is very unsafe and requires a full rebuild.