the best bacteria are aerobic, so having the the media wet, but not underwater, will be the best for filtration. You can also stick a hose from an airpump in there if you want to increase oxygen levels. In all my systems I maintain, I run filter wool, media, then filter media. These are all in trays with holes in the bottom, so that the top layer of filter wool get rid of the big pieces of crap, and because it is above the media, the evenly spaced holes in the top tray means that the bio-media is all equally dampened, but is never submerged. By the way, how is the puffer I sold you going?