Read everything I could find about this but couldn’t find conclusive info about these two points...
1. When removing the Cutless Bearing (prop shaft is already removed) do you pull it out towards the bow or does it matter?
With the shaft removed it does not matter.
2. After installing (I have the two set-screws) do you bother indexing the bearing with an awl, punch, or small drill bit, or do you just tighten the set-screws? It was recommended that I use a small drill bit.
Yes you are supposed to "spot" the bearing shell.
From ABYC P-066.8.1.1.1The set screw material shall be harder, and galvanically more noble, than the bearing shell.
6.8.1.1.2 Spot drills having the same tip angle as the set screws shall be used to increase the grip of the set screws.