The preload adjuster make the spring "shorter", increasing its "rate", so to speak. The shorter the spring gets, the more it's fighting to keep itself extended, making for a stiffer ride. The top ring is the lock for the adjuster ring. If they're anywhere near the top of the threads on the body, it's likely barely enough to keep the bike weight up, let alone bike + body. Crank the adjuster ring about halfway down the body and let us know what happens.
The knobs only adjust compression or rebound damping rate. You'll barely feel the difference when just bouncing on it. Even when just casual riding, those adjustments barely make a difference. Find the correct compression/rebound settings (I'm sure they're online somewhere), set 'em and forget 'em. You need a baseline to start with.
Back in the day, I roadraced a stock, streetable Kawasaki EX500 (Ninja 500 with really skinny rims). Just about a flexi flyer, wimpy assed chassis as you could ask for. Bare bones, small steel tubing, lightweight...not really a racer, but sorta looked like one. The forks would sack out approx. half of their travel just lifting the bike off it's sidestand. When I sat on it they would almost go flat (I only weighed about 175# then LOL). They had no comp/rebound adjustments either. All I did was add a stack of big diameter washers on top of the springs (inside the fork) and they worked, well, acceptable. Certainly upgraded springs, oil level and viscosity changes would have helped, but these were spaghetti thin tubes to begin with (wobbled like a bitch in the rough stuff). Even the rear shock was stock, with the spring cranked full tight (looked like a stock Warrior front shock).
I had as much fun as I could handle with that bike...