BH-2000 Air in Intake

I have a new BH-2000 and unless I lower the intake so that the entire thing is under water it seems to keep sucking in air. If I try to set it up to "skim" the top of the water like I think it should, then it will constantly gurgle and suck in the air. I can actually see air getting trapped in the part that you raise or lower to adjust the intake level. Is this normal?

Thanks for the help!