Is there a problem? I might be misunderstanding the description, but pending correction/clarification, here's my thought:
i let the car run as per the manual instructs (rad cap off, front end in the air, blah blah blah). the car reaches operating temperature but the coolant DOES NOT go down in the radiator. along with that there is no pressure in neither the top or bottom radiator hoses. so pretty much it seems like the coolant is not circulating. BUT the car is not over heating and it is blowing hot air out of the vents.
With the radiator cap removed, pressure cannot build up in the cooling system and therefore there would be no pressure in the hoses.
If the cooling system has been filled properly, it's not likely, as far as I know, for the level, as viewed in the radiator filler neck, to go down when the engine reaches temp. Rather, because the coolant volume expands when it heats up, it's more likely that the level will go up, leading to the
already full radiator overflowing out the open radiator filler neck. (This is why, when the rad cap is on, the level in the external reservoir goes up.)
Also, if the heater delivers continuous hot air to the cabin, then the coolant is circulating through the engine because the heater core is supplied from the crossover pipe at the top of the engine ("out" from the engine) and returns the coolant to the pump ("return" into the engine). If the coolant weren't circulating, the heater output would tend to cool down.