Water just needs to be above the top of the radiator tubes. Much more than that it will come out overflow when the engine reaches operating temperature. You did not state whether your heater has a thermostat, so i would suggest just plugging it in a couple hours before use, or putting it on a timer. even if it is stored inside, an old blanket thrown over it will make it warm up quicker due to restricting air circulation. Normal operating temperature when working is around 200 degrees at the water outlet. Many people when using their cubs in cold weather cover part of the radiator ( about half) to keep engine at right operating temperature. To check temperature the infrared (IR) thermometers can be bough at many places pretty reasonable, but you need to remember, they only read surface temperature. If a fan is blowing over the surface, the reading will be lower than internally.
Here is a link to the ones Harbor Freight sells, but you can find them at many auto parts and hardware stores.http://www.harborfreight.com/catalogsea ... ermometers
One note, if it is tuned properly it should start easily at least down to 15 or 20 degrees. Probably lower than that, but below 20 degrees I do not worry much about starting my cubs, being an old retired geezer I hatch the stove.