Calibration of end-stops

I think this is a fairly generic question, but just in case it matters, I'm working with a TechZone Lasercut Mendel.

My question is where to set the limit switches. I think I'm OK on the X limit, since I set it at the left edge of the build area. On the Y limit, I set it outside the build area so that I can access the purge slot. Is there a guideline on exactly where to set this? And especially on the Z limit: Should I set it where the hot end just touches the build platform, and if not, what is a good calibration tool for this? I've set it using a piece of paper, adjusting it so that it just begins binding the paper where the limit switch stops travel, but this seems to be too close. The first layer I print is smeared out flat.

I find that the purge slot is unnecessary and wastes build space so I position the endstop so that I include as little of it as possible and still be able to go the full 200 mm range on y. Replacing the bed with one without the cut-out is in my list of things to do. The skirt feature in Skeinforge works well to ensure that the extruder is "primed" before starting the part in most cases.

As far as the z, did you adjust the clearance while the extruder is at operating temperature? Thermal expansion would usually push the nozzle closer to the bed. I also do it with the bed at temperature. If you do it that way, then you need to enable the Base feature in skeinforge to an altitude of -0.1.