the owners manual does a good job of explaining how to adjust the shocks. but, they don't explain what the adjustments do, they say"smooth terain=soft settings and rough terain =hard settings" (sorry if i'm spelling terain wrong). that's not what you should do, it's not that easy and not allways right.
i'll try to write this so it's easy to understand for someone that doesn't know how the shocks work, i'm not trying to be a know it all. compression is the upward motion of the wheel or the reaction to a bump. rebound is the downward motion of the wheel or the reaction to spring pressure. a hard setting is more resistance to movement and a soft setting is less resistance.
to setup the shocks do one thing at a time, like both front shocks compression only. go to a track or find terain that is most like what you normaly ride on and go ride on it with the shocks in the stock position (owners manual tells you the stock settings if you all ready changed them). this is for compression only, get a good feel for the shocks and figure out if your bottoming the shock. if you are, then tighten it up two clicks or half a turn. if your not bottoming, then soften it up two clicks or half a turn. repeat this until bottoming occurs or stops or until you run out of adjustment. if you reach the point that your bottoming, tighten in small amounts untill it stops and leave it alone, for now. if you were bottoming, your a fat ass, just kidding, but if you get it to stop then soften it up in small amounts until you bottom again, then go back till it stops. do this on the front's seperate from the rear.
now for rebound, find some whoops, ride though them and get a feel for the shocks. try to feel if the ride gets rougher as you go though them or if the shocks seem to bounce. if they get rougher you should soften them ,the same as you did for comression, because they are not letting the tire's return to the ground in time for the next bump, so every bump makes it worse for the next one. if it is bouncing, tighten them up until it stops bouncing or until you run out of adjustment. do all this the same way i described for compression.
now, go back and do the compression again and then the rebound again. this is because both adjustments effect the other, so one might change a little as you tune the other. you should try different settings, just to see if you like it. i have my rebound all the way hard and compression all the way soft on the front and rear because i like to jump and have a soft landing without bouncing. i plan on doing alot more tuning but i just need the time, i plan on tightening the compression til i think it's to harsh but i will leave the rebound were it's at because i like it. i'm just telling you this so you know it's ok to do what feels best to you, once you figure out what you like. sorry, if i didn't help.