I installed a kat 600 rear shock and first I notice the seat is like 2 inches higher. That's good I guess (I'm 6-1). When I ride it, it doesn't seem really all that much better than stock. It bounces quite a bit. How do I adjust it?

Spring preload is adjustable with your toolkit spanner via the slotted collar on the bottom.  The shock is already a bit stiffer so 3 or 4 is probably a good setting depending on your weight, riding style, and road conditions.  Rebound damping is a little dial set into the top of the shock, I've got mine on 1 or 2 depending on how bumpy the roads are.  Its pretty harsh set high if the pavement is uneven.  The Katana shock is definitely nicer, but its not a huge difference imo (not nearly as dramatic an improvement as progressive springs and and heavier oil).

I don't have the toolkit spanner, is there any other way to adjust preload?

You might be able to wrangle it by shoving an old flathead screwdriver in there but it is not going to be easy.

What do you mean by bouncy?   Perhaps that Kat shock is worn out.  Does the bike bounce repeatedly after going over a largish bump in the road?  

Rob

my 99 kat shock is bouncy too..

when i got it had 500 miles on it, its now got over 2000 miles and its still bouncy. Its hard, i readjusted teh dial up on top but it didnt do much, it doesnt turn much, I am stuck on 4 on the bottom preload.

It can be a harsh ride when I am riding alone, with 2 up its actually a lot better.