The screw is for setting your rebound damping; it is not a set screw. The screw should turn independently of the 14mm preload adjuster when setting your rebound, though it will turn with the preload adjuster when adjusting preload (fixed position with respect to the preload adjuster). Your rebound screw is either set full in or full out, and is jammed. It should never be stuck like that.
Someone else will have to chime in on the stock setting, but your logic is correct. You turn it all of the way in (clockwise), lightly seating it, then back it out to set it. I'd say 1 to 1.5 turns out.
'96 DR650, '01 SV650, '10 Aprilia Tuono 1000R