Pod 2.0 unit best input settings

[KamaSutra77]

Hello folks,
I've been struggling with my standard Pod preamp ( with the 2.0 upgrade installed) to get the best sound input. What input gain setting works best for you all out there using the pod? I had assumed -10 but not sure if its working right, I seem to need more gain which introduced lots of noise. But then again, I'm finding that pushing the levels to high is intrdroducing artifacts and digital distrotion well befroe the signal says it's clipped in the meter. Is it best then to stay in the green for digital recording, even avoiding yellow no to mention red peaks?
2. The amp/direct switch whats your take what works best? I'm getting to the point where it seems the best sounds come forma cabinet miked up and fed in as a mic signal, the pod acting as a fancy preamp fuzzbox, which is too bad Id like to be able to work into the wee hours tracking cool riffs.