First of all Welcome.
You should find everyone on here very helpful to get you started or solve problems and queries.
Water is going to cause you problems - whether it is in the oil to start with, the methanol, or the bio.
You can use a normal alcohol hydrometer provided it covers the 0.8-1.0 sg range.
If the methanol is only 85% for processing you are likely to create a significant amount of soap due to the competing reaction of the transeterification and saponification (catalysed by water).
The 27/3 test can be performed on the bio/oil mix once the glcerol has dropped, no need to wash the bio. In fact the 27/3 test can be performed even before the glycerine has dropped if desperate.
If you used 85% methanol for the 27/3 test the results will be meaningless. The test needs nearly pure methanol and dry bio, otherwise the water present in the methanol seriously reduces the ability of the methanol to dissolve the bio.
If you used 99.95% methanol but wet bio, then you will also have a meaningless result as above.
Worth posting what quantities of things you used and what process you used to try and make the bio.
Did you dry the oil first, how?
Did you titrate the oil to find out how much FFA was present?
What catalyst did you use (NaOH, KOH, ASM)?
How pure were the reagents? (F|YI: you have already said the methanol was 85%), if using NaOH has the pack been open and absorbed water/CO2, KOH is normally only 90% pure).
How much glycerine did you produce?
From what you describe, I strongly suspect you have produced Bio, but possibly have an incomplete conversion, however the 27/3 test being suspect does not help. If that is the case, and the conversion is incomplete, you can certainly reprocess the oil/Bio. The first step will be to get a meaningful 27/3 result. This will work as a guide as to how much of the reagents you will need to complete the process.