When you ask for level two and three, I think you are asking for questions that are beyond recall or simple comprehension.
Here are some questions I would ask:
- How does the reader know that Alan is afraid of the Old Man?
- If Alan could be stereotyped as a teenager, what type of guy might he be?
- What seems to be Alan's struggle with Diana before the story?
- What is this story saying about love?
- If Alan goes back to the Old Man, what do you think Alan would do with the spot-remover?
- What does this story suggest about our society in terms of money or instant gratification?
- If Alan went there for the love potion, why does the Old Man spend so much time explaining the spot-remover?
These questions all require inference and/or judgement.