Okay, now for specific answers. But first, a question - do you have a version of that Sony receiver with the auto calibration function? The manual makes me think that the U.S. version doesn't have that. If it has auto calibration, that makes things easier. The answers below assume it doesn't, so let us know if you have it.
How high do I want the subwoofer?
Do you mean volume-wise, or physically? If you mean volume-wise, then you'll want to set it so that it blends in with the rest of the system. If you have an SPL (sound pressure level) meter, then you can do that precisely. Otherwise, you can set it by ear. Ultimately, you want to enjoy your system - so set it how you like it. I'd start with the volume dial on the sub in the middle and then vary the volume level using the receiver's setting for the subwoofer (and tweak both as desired).
What should I set the cutoff frequency to?
Set it on the sub to the highest possible value (200 Hz, I believe). You'll let the receiver handle which frequencies go to the sub.
Should it be set to normal or reverse?
That depends on your room and where you have everything placed. The concept is that you want the cone in the subwoofer to be moving in phase with the cones in your other speakers. In reality, you may not be able to tell a difference between the two settings. I say try both and see if you prefer one or the other.
Do I need to change any settings on the receiver for the Sub or just the sub itself?.
You'll need to set up the receiver so that it knows that you are using a sub, and which frequencies you want sent to the sub. So, the receiver should have a setting for the crossover frequency, and you'll set your speakers to either "large" or "small" ("large" speakers will play all frequencies and nothing will be sent for that speaker to the sub, while "small" speakers will have everything above the crossover frequency sent to them and everything below the crossover frequency sent to the sub).
That's to get things started. Just let us know what questions you have after looking this over.
