yes when you go to leveling near middle make sure that Level Resources only when activity total float box is checked and that below it that Preserve minimum float when leveling is 0

I am not sure what you expected but thats what leveling does 

you have three options

option #1

change your logi and make more of the relationships FS

option #2 

increase your durations to use less manpower and spread it out more

option #3

use the leveling too

tools level resource then choose what and how you want to level your resources

I do not use P6 but recall its updating is awkward with regard to time phased data and required you to make periods updates based on fixed periods so fixing previous periods performance can be a nightmare.

The database of the software I use allows you to delete specific prior period event updates and create new ones for prior periods for an easy fix of the table. It does not require fixing Financial Periods to get the right time distribution because of superior algorithm to calculate the distribution for any period of your choice.  I do not believe you can do this with P6. 

The operation to fix past performance events in Spider Project is very simple; it is similar to the regular updating procedure wich requires only steps 2 and 3.  

1. From main menu go to the Performance Archive Table, a table similar to an Excel table, and delete any prior period performance you need to fix. 
2. In the GANTT view go to the activity you need to fix or add prior/current period performance, right click and select <Add to actual data input table>, enter and adjust if necessary the performance data into the actual input table. 
3. From this actual input table upload the data by clicking on the upload icon. Do not change the update version number and Data Date if the entry is not for regular updating purposes.  

In this way your Performance Archive Table is fixed and your time phased reports [including EVM reports] will be correct. This procedure is also convenient when new activities are added and these activities have some progress before current DD.  

Going back in time to a prior version and fix the data by running several updates along with period performance is insane, just imagine a small error is still to be fixed, what a mess it would be. I suppose for P6 there shall be a better way than going back to a previous version and run again periods updates with the settings fixed as per your recommendation.  The P6 way to fix prior periods performance I do not know.

I also recall P6 having issues when the Financial Periods among jobs is different as it only allows for a single definition.  Some users were recommending using a separate database for each client but what happen when different units of the same client use different financial periods?

Your image show that the Percent complete type is Duration. Change to Physical as Zoltan suggests.

• I understand for P6 material is just a cost type, it does not model material as a consumable resource. P6 materials resources might not be leveled at all. This is wrong and misleading because material resources are indeed consumable resources that in many cases shalll be leveled, or otherwise the result might be unfeasible.
• http://www.ronwinterconsulting.com/Reviewing_Resource_Leveled_Schedules....
• Just try the following example. 
• BRICK INSTALLATION AT CULEBRAS ISLAND WHERE BRICK DELIVERY IS LIMITED BY BARGE CAPACITY AND SCHEDULE
• A WORK WEEK FOR AL LACTIVITIES OF 7 DAYS 8 HOURS PER DAY
• OBVIOUSLY BRICK INSTALLATION WILL STOP WHEN BRICK NO LONGER AVAILABLE AND RESUME AS SOON AS BRICKS BECOME AVAILABLE
• THERE ARE NO LOGIC LINKS AMONG ACTIVITIES, JUST SCHEDULED DELIVERIES
• Data Date: 10/07/2013  08:00
• Bricks installation A- 5 DAYS   -5,000 BRICKS
• Bricks installation B- 10 DAYS -10,000 BRICKS
• Bricks installation C- 20 DAYS- 20,000 BRICKS
• Delivery 1 - DAY 1 -10000 BRICKS
• Delivery 2-  DAY 10 -5000 BRICKS
• Delivery 3-  DAY 16 -8000 BRICKS
• Delivery 4-  DAY 23 -12000 BRICKS
• ----------------------------------------------------------------------------------------------------------------------------
• Can you tell me what is the resource leveled schedule as bricks are a consumable resource?
• Can you tell me how you control consumable resource leveling when resources cannot be in fraction but discrete units?
• Please provide an image of the resource leveled schedule Gantt.

make sure that you are using physical % complete and also go to admin preferences 

click on the earned value tab 

make sure that the technique beiing use is activity % complete

and make sure that ETC calculations is set to ETC = Remaining cost for activity 

no problem

for material default unit/time use 1 because any thing divided by zero or multiplied by zero is what  ? Yes zero

so what it does is basically is multiplying the default units/time by the duration to get the budget amount and for distribution it is dividing this budget amount duration and is spreading this amount units/time by the start and end date of the activity. So multiplying and or divided anything by zero will be zero.

for example if you have a resource for labor and set the default units/time to be 8 and you have a duration of 5 days it will take the 5 days time 8 hours per day 5*8=40 budgeted units. Then for the distribution it will spread the 40 hours by the units/time in this case 8 so it will show 8 hours per day for 5 days.