bar up, or down, before tightening bolts?

High as the tip can go.

Think about it- 90% of the cutting you are likely to do is with the bottom side of the bar, in a downward motion.
So, if the stud nuts are not tight- or it is a budget lightweight saw- odds are pretty good the bar can be forced up anyway (especially with the casual user special of a half dull chain).
42cc and 18 inch is about the largest combo you might want to try- its a bit like running a 28 inch bar on a 60cc machine. More bar you have hanging off it- more leverage there is and a lot of the budget saws do not have a lot of bar pad clamping force.

All that is assuming the bar is the original that came with the saw and is the correct tail mount.

That is what I'd more or less concluded, based on the same thinking you outline. Thanks for confirming. My neighbors Stihl 500 has about 0.75/1 inch of play, and was the one pushing me towards the 'neutral' option (which he says the Stihol guys in town - authorized dealer - recommended). Perhaps somewhat brand-specific but no matter.

The only issue is that 'tip up', or 'tip down' or 'tip neutral' definitely makes it fussier to adjust tension. Simple geometry - the further away the tip is from the main axis is a perfect ellipse the chain would form if 'completely' neutral, the twitchier it gets to fine the right tension. Tip up on my new low-end unit forces me to use slightly different rules-of-thumb for setting chain tension. No matter. Ever saw I've everr had requires somewhat 'custom' approach to 'setting it up' (and, of course, chain brand, newness, etc) all make it 'interesting'.