I have alleviated all the clunking! WOOO!
I unbolted bottom of the strut, dropped the entire assembly while still having the airlift strut mounted at the top to the shock tower. Loosened the locking collar and spun the bottom of the strut 1/2" from where it was shipped. I'm now at 2" of threads instead of 1.5". Relocked the collar, attached the sway bar endlinks provided with the kit (I was running without the sway bar connected because it was making too many noises - could've been only because of the stut maxing out). Remounted the strut into the assembly, bolted it, torqued it and voila! No more clunking, and still same psi as before. Feels much better with the sway bar connected too.