I have the same mic and radio as you.
The two swithces on the mic are 500 or 50K ohms. Switch it to 500. And the slide switch on the mic itself OFF.
Leave the preamp switch OFF (marked as OUT). On mine, no need for the batteries in the mic. IF you want to see what it sounds like with the preamp ON, the TS-2000 supplies power to the preamp. (You can turn on the TxMON function and listen to yourself with headphones)
Receiver AGC - I leave mine set to ON all the time. I personally have not come across a case where turning it off helped anything. Note that in SSB and AM modes, just push the AGC button and you can then set the AGC response time. When you first see it, remember where the pointer on the S_____F display shows so you'l know where the factory default was. Then the response time is something you experiment with depending on your signal and noise levels. I leave mine slightly on the S side from mid range most of the time.
On the "where do you set it" to not overmodulate the receiver, the mic settings won't affect the receiver, only the transmitter. I just followed the instructions in the users manual for setting up the levels to match my voice and speaking level, watching the ALC and comp meter carefully when I did it.
My settings were fairly different than the factory defaults, but your mileage will vary. I probably don't have mine to the "most optimum". Some people have the ability to record your audio and immediately play it back for you. I haven't dont that yet.
On FM mode, I have mine set to HIGH (or whatever they call the most sensitive setting).
Then have someone (better if someone you know) that you have a clean signal with, that also knows what good audio sounds like, to give you an honest opinion. I hear some guys giving out "excellent" audio reports to people that are really overdriving or have WAY too much compression (SSB). And some are over particular (IMHO) and may say you will always sound sub-par and need a XXXX brand mic.
Good luck!