bb1fit,
Remember that the bit-shift register is an attempt to mimic the physical movement of the bottles. When a bottle moves a certain distance on the conveyor, a bit should shift 1 position in the PLC memory. To figure the right bit number from the LS2, simply count the number of bottles (and empty bottle positions) on the conveyor between the LS2 and the Divert Gate. In real-life systems, I set the encoder to pulse every 1", and then use a 100-foot tape to measure the distance between the trigger point and the diverter gate trip point.
Because your memory Words are 16 bits, count the bottles like this, starting with B3:4/0 at LS2 (where a 1 bit is shifted into the BSL if the bottle is Tall), then B3:4/1, B3:4/2, and so on until B3:4/15, then you go to B3:5/0, B3:5/1, B3:5/2, B3:5/3, B3:5/4, B3:5/5 and you are there! This same method can be applied to "measure" the distance between ANY BSL trigger point and the various action points of the Bottle Fill system.
To get an idea of how the BSL works, Run the program, start the conveyor, and arrange your windows so you can see the LS2 limit switch and also your rung that contains the BSL. Set the so-called "Scans" speed at about 50%, so that you can see the action. Now RIGHT-click on the BSL instruction and select "Go to Data Tables". Look at B3:4/0 and watch as a tall bottle goes under LS2. You will see a "1" pop up in B3:4/0. Each time the encoder pulses, that 1 will move 1 position left, finally wrapping around to B3:5/0 and dropping off at B3:5/15 (if you have your BSL Length parameter set to 32).