What' a good height to set the fork tube in the upper clamp?stock setting was 1/4 inch

 

The stock fork height is about 1/4" above the upper clamp.
You can slide the fork tubes down so they are even with the clamp for a little more height or raise them till they almost make contact with the bars (about 1/2" is all) to lower the front end, adjusting the fork height can make some fairly noticeable changes in the way the bike handles and if you go up too far you may have tire/fender clearance issues if you ride hard but your new Race Tech kit should all but completely eliminatethis from being a problem.