If you want to change out the tank filter then see my #2 post.
Tank screen location
The bubble in primary filter is normal. No one seems to be able to explain why the primary filter is always 1/2 to 3/4 full. I would not worry about. Do you see tiny air bubbles entering the primary filter now if you rev the engine by hand? If you do not then all is well. The orientation of the primary filter, vertical or horizontal, should not really matter.
btw: if you change out the line from tank filter to the hard feed line then you stand a very high likelihood of damaging it. It is very brittle if it is original. You can get a new one $$$ or just cut the crimp-on shell and replace it with a normal hose. It is just a barb and you can clamp it with a normal hose clamp.
Good luck.