As a general principle I always use a x10 probe unless measuring millivolt levels. That way, if it accidentally gets put onto high voltage it's far less likely the scope will be damaged.
A habit from CRT TV maintenance days. It also means less circuit loading. When on x10 you need to compensate the probe for this particular scope otherwise your readings will be way out. The manual should tell you how.
To find the right vertical range just start at a low setting and increase until waveform is large enough to read comfortably. The scale is in volts/division so 1v/division would be suitable here. 5v/div will only give a one-division high trace.
As for grounding, depends if the PSU output is grounded or not. Generally it will not be. However, if the PSU negative is grounded then that is the only place you can attach the probe ground clip.