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That is the correct approach. In step 2 above, 'HVAC Operation Schedule' should be used for fan only and not for any other parent coil object. Night cycle availability manager internally overrides the fan schedule only. There are plenty of example files which use night cycle manager which can be very helpful.

If your setback thermostat temeprature is 14 C and thermostat tolerance is 0.2, the night cycle will turn on when control zone temperature is 13.9 C [i.e. 14-{0.2/2}]. Once the system is on it will remain on for the Cycling Run Time specified by the user. AvailabilityManager:HighTemperatureTurnOff is generally used for solar collector control but you can try using it in combination with night cycle manager in availability manager assignment list and carefully review the results. High temperature turn off can sense zone node temperature and turn off the system if it exceeds 16 C. Of course, this will work for only one control zone. For multiple zones, EMS can be an option to turn off the heating coil schedule at 16C.