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Have you mapped the keys for the bombsight ?
The commands that need keys mapped to them are under the "Gunsight / Bombsight Controls" heading in the "Controls" section.
I am referencing v4.08m so if you have an earlier version it may not be in the same area or have all of the same commands.
Wheels
In the video he is manually adjusting the bombsight almost to the very last moment when the bombs are dropped automatically by the bombsight.
He uses the Toggle Sight Mode (Auto) feature to turn on the automatic bombsight.
If the plane is not keeping altitude properly when using Level Stabilizer it may not be trimmed properly.
Try adjusting the trim and engine speeds without using Levlel Stabilizer and see if you can get it to fly farily straight and level.
It should be possible.
Just guesses on my part hoping to find what is necessary for you to be able to use the Norden bombsight effectively.
Wheels
Is there a good tutorial online for dive bombing? I have been trying to get back into dive bombing with the Stuka and Pe-2, but I always find myself having to twist in the dive to get a fix on the target. This seems to ruin my accuracy, I am sure I am mis-judging the time to nose over but I am not sure exactly where I am going wrong