Seems like you are using an old version of yEd. Option "Labeling" - "Compact Placement" was introduced in yEd 3.12. Please upgrade to the latest version yEd 3.12.2.
Preferred Placement has also an option "Side of Edge" (see the corresponding screenshot in my previous answer). Choose "Left or Right" to prevent labels from being placed on edges.
The top-to-bottom order of nodes is determine by the directions of the edges connected to them. From your screenshot it seems like there was only one incoming edge at the idle state node during layout. Consequently the idle state node will be placed below the source node of its incoming edge. If you replace the incoming edge with an outgoing one, the idle state node will be placed above the target node of its single edge. Alternatively, you can try running the layout algorithm twice. The first time with your current settings. Then manually move the idle state node upwards to a better place. Now run the hierachic layout algorithm a second time but with option "General" - "Use Drawing As Sketch" selected.