Here's what I did, I made the merged patch, then I made my bashed patch, which the merged patch went into.

After build the bashed patch the merged patch was unchecked and had regular purple text (as did one more mod). I assume these are supposed to be left unticked?

Also, project beauty went purple with italicized text, I can either put a tick or a dot in it's box. If I ticked it the whole line goes red so I left it with the dot, don't really know what to do tbh.

Did I do that correctly?

Edit: I also removed anything beginning with "leveled" from the merged patch in fo3edit.

For Fallout 3 I do not use bashed or merged patches, but then I do not use that many mods.

What happens if you only use a merged or bashed patch and not both.

Well I'm getting missing meshes you see and I'm wondering if it's because my load order is huge, approx 200 files.

I don't actually see any difference, I just wondered if it was best to use both rather then one.

Guys is the Merged patch supposed to have a nomerge tag? Is it supposed to be merged into the bashed patch?

I'm very experienced using Wrye, but I'm not sure what "merged" patch you're referring to. Any esp who's name is in black in the mod-list needs to be checked including the bashed patch.esp at the very bottom. The mergable esp's should be in green. When you build the bashed patch, make sure to tick all the esp's to merge that show up in the "merge" header. When the patch is done building, it should show a cross next to all the green plugins instead of a check. That means they've been merged successfully.