How to Brew (Palmer) recommends no more than 1 gallon of water per pound of grain.
Looking at your recipe, it seems that you have only 0.5# grain and I am thinking that your might have trouble submerging the bag into such a small amount of water.
Perhaps others can be more helpful, but my input would be to put just enough water in to cover the bag of grains.
The temp can be between 150 and 160 (the magic number that you want to stay away from is 170, as you can start to extract tannins.
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