It's quite simple when you go to put it all back together. The lock nut gets threaded all the way down so that the needle valve shaft (that shaft with the tapered tip) can bottom out, then you run the lock nut back up making sure the tapered shaft is still fully seated, this sets the end of the range so make sure the adjustment knob is set to the same end of its adjustment. Problem with only doing the one leg is if the other one was not set up exactly the same you will never be able to have the same dampening settings between the two, causing unsafe riding, tire wear, etc... best just to do them both so you know for sure oil is the same weight/type and set to the same height (coat hanger makes a great dip stick) and that both have been bottomed out with the external adjuster set the same.
I've run into less than great service on my STT fork as well and found all the same stuff going on that you have so this is why I say to do them both at the same time and make sure they are right. The STT fork has the external adjustment as part of the top fork cap with damper rod (needle valve shaft) attached, so this is my experience but the setting you ask about when rebuilding is the same.