The counterweight is designed so you can counteract the weight of the cartridge at the other end. To do this first you have to find the balancing point, so turn the weight so the arm if floating (not lifting up of down) best place to do this between the arm rest and platter. The plastic guage can move independtly to the weight to once you have it balanced move the plastic counter to zero whilst the weight remains at the balancing point. Then move the weight and counter to set the match the value supplied by the cartridge manufacture, so with the Project Debut it is the Ortofon 5e which to memory is 17.
I think the grove you are refering to is the anti skidding device and the fishing line should go on the second notch on the arm.
Hope this helps