With the media basket in the center section, the water flows over the wall from the 1st section (on the right side, looking towards the tank from the front) and down through the filter floss. It then goes under the wall into the return section, on the left side of the tank. The water level in the center and the return section will stay the same, so you want to make sure that the return section has plenty of water (ignore the lines in the "window" on the side of the tank if they still have those) but you don't want it to be completely full. The water level needs to be lower than the filter floss, sitting on the top of the media basket.
There's a picture with the water flow diagram here:
http://shop.mediabaskets.com/Coralife-Biocube-29-Media-Basket-CL29MR.htm
Edit:
As far as the false bottom in chamber two, where the media basket goes, I took it out on my BC14, but I haven't done it on the Oceanic 29. I do remember having to push really hard to get it to come loose, though. It wasn't easy.