How do I adjust the rear preload?
The stock shock is not adjustable for preload. Assuming you have an EX500, EX250J, or some other non-OEM shock, put the shock on the bike, then measure "sag".
Sag doesn't matter
First, a note from our suspension guy: Sag numbers don't matter and can lead to cranking in too much preload. So long as there IS some sag, and it's not more than 2 inches front or rear, you're fine. The really important part is getting the right spring rate. If you feel you have too much (or too little) sag, then change the spring. The one you have is the wrong rate for you.
The preload adjustment collar is something you adjust for personal preference. It will make the ride a touch firmer or softer. Preload adjustment isn't a replacement for having the correct rate spring.
Sag measurement & adjustment
Put the bike up on the centerstand. Then measure the distance from the rear axle to some fixed location, such as the bottom of the cowl at a joint in the plastic. Then get it off the stand and sit on it in full riding gear and make the same measurement again. Subtract the second from the first to get "sag." Adjust the shock to get 1 1/4 to 1 3/4 inches sag (1/4 to 1/3 of full shock travel).
It all depends on your weight. Also, it helps to have someone else measure for you so you can get your feet up to get your true riding position. Also, jiggle the bike with you on it to get an accurate reading after the suspension is "unstuck."
You can adjust the preload by loosening the preload locknut or ring, then turning the adjusting nut/ring with a suitable spanner (picture below - available at most motorcycle shops) or tapping it with a screwdriver and a mallet to rotate the piece.