This article is from the rec.audio.* FAQ, by with numerous contributions by Bob Neidorff others.
Adjusting a tape machine for best results usually requires
special equipment and test tapes. Unless you know what you're
doing, leave it for a pro. If you are serious about doing it,
buy the service manual for your particular tape recorder. It
will list a detailed procedure, as well as describe the correct
test tape and tools.
As for setting of record levels, it is best to experiment with
different levels on different tape brands. Different
formulation will reach saturation for different levels.
Generally speaking, the transients on a Chrome tape should peak
at about +6 dB above 0, though some formulations can take
significantly hotter signals.