#3 is correct but if (and I mean only IF) your sled is stock, and you have access to quality gas, your sled will run much better in clip position # 2 (the '07 needles are the richest of the bunch so you can go leaner). Be sure to run 20 pilot jets if you do that. Sled rips then! Do NOT use that if you run any type of aftermarket exhaust.