Do I have to remove the caps? Also should I add water? On one side the water is about a 1/4" below the top of the opening and on the other side it's about half.

You should remove the caps and charge on the lowest/slowest cycle.

When you add water, use distilled water. You do not want minerals in the mix. I usually have acid around and mix that way.

I'm no expert but I believe that 1/4" below the top is what all the cells should at least be before any charge or it could possibly explode due to the gases produced during charging. Distilled water of course. I found this website.
http://www.batteryfaq.org/

Thanks fellas!