Remove the arm. Looking in there, I don't see how it could drain to the trough. It needs to be at least 2/3 full to make any difference. I fill it till it touches the base, and adjust from there. You have to look for oil slick at the bottom of the arm to know if you're effectively dampening.
My level at this point is one drop above where it barely touches. I started out really high and seemed to dull the sound a bit too much. I'm still playing with it. My cartridge is a Shelter 501.