The balls are check valves... They will allow fluid to flow into the topcap, but will not allow it to flow out. When the lever goes one way, it nudges one of the balls off the seat and allows fluid to flow out of the topcap through that hole (fluid flows into the topcap through the other hole). The fluid is getting pumped from above the IFP into the area between the topcap outer sleeve and the air spring tube (and back again when the topcap extends).
Did you replace all the o-rings?
Here is how I bled the topcap...
1. Pack some of a heavy grease into the air tube that connects the Schrader valve to the air chamber. This will keep the fluid in the topcap from draining into the air spring when you're trying to bleed it. Once you get it all put together, you can push the grease out with air pressure.
2. Assemble the inner sleeve, with the air tube, the IFP (at the bottom) and the little cap that looks like a shower drain. Fill up this sleeve with the shock fluid.
3. Assemble the brown "switch" with the springs and the ball detents into the topcap.
4. Assemble the inner and outer sleeves onto the topcap and tighten everything up. Some fluid from the inner sleeve should come up through its passage into the topcap.
5. Place the topcap into the top of the air spring, pushed down about halfway. Fill the gap between the outer sleeve and the case of the air spring with fluid, then slip in the C-clip to lock the topcap into the air spring.
6. Pull up on the topcap. As the topcap extends, this will pump fluid from the gap between the outer sleeve and the air spring into the topcap, filling it with fluid.
7. Assemble the rest of the topcap. Use the C-clip to lock the topcap cover in place and tighten up the Schrader valve.
A lot of words for something that would go better with a picture or video.
When you have air in the system, it will make a lot of noise as the fluid+bubbles work their way around when you switch travel. When you have it bled, it's quiet.