I have an Olympus DM620 which was given to me by a friend who no longer wanted it. I assume the 620 is similar to the 420, so I'll give some advice. This could apply to most recorders though.
Mic on medium is normally where I keep it, though low is pretty good if you know you're going to be in loud environments. I like to record at a very quiet volume and then boost the volume later with a limiter in place. Software limiters are generally a lot more reliable than ones in most recorders I've noticed, as they have the opportunity to look ahead and turn things down even before they become distorted.
Setting zoom to wide may work but I prefer to have zoom on normal... I don't like what wide zoom does to the center of the stereo field. Normally when I record I use external microphones as I don't like the Olympus internals for wide open sounds. I use binaurel microphones from sound professionals, I can't remember the model number but the ones I use actually look like headphones. In fact, they are headphones with microphones imbedded in them, and they sound pretty good though they are a bit noisy in quiet environments.
Setting mp3 to 320 is good for saving space but I would strongly recommend using PCM when possible. MP3 is a lossy format meaning that it makes the files smaller by throwing away data which can not be recovered. This loss of data translates to different sorts of artifacts creeping into the sound such as warbly, underwater sounds. Also some sounds like sharp claps will almost sound brushy or swishy. While MP3 at 320 K will sound pretty good and the artifacts will be subtle, I never chance it. I always record in PCM and then compress to mp3 later after editing.