My question is were they ripe?
You say Green Bell which make me worry that you did not let them turn the color they get when mature. Normally it is red, but it could be orange, etc. If they were still green, the seeds were not full ripe for harvesting, and this lowers germination considerably. You might have a few good seed or none at all.

If they peppers have turned color and ripened~
Questions:
1) Is my method (I started just popping the seeds off of the heart of the pepper and letting them dry out without washing them in water.)correct?
This is fine, I spread them out on a paper towel on a plate and let dry for a couple weeks.

2) Will seeds from extra small peppers germinate?
Sure, the seeds can be fine inside smaller peppers.

3) Does the size of the seed matter? (1/8th inch or 1/16th)
No, once completely dry, you can tell which seeds are bad. If they are really thin and easy to bend, they are no good.

4) Should I be worried that when they dry some/most shrivel up brown?
Shriveling up is not good. Sometimes when they are thin and bendy, they curl while drying, and they are not viable. Some browning can be fine.
Hope that helps,
Remy

Thanks for the tips!

Were they ripe?
These didn't seem to turn color except for a very very light yellowish green. If I leave them for any longer than this they begin to start rotting on the plant.

So it would seem most of my seeds are shriveled since they weren't ripe. I have a few good bags of lightly brown seeds so I should be fine for next year.

Any idea if you can harvest cucumber seeds the same way?

Some times peppers start to rot before they are ripe all the way. Not sure why this happens but it does unfortunately. You do need to have them not be green for the best chances of viability.

No, cucumbers are completely different. You need to let the cucumber/s get really big and over ripe. They turn yellow or orange when ripe. They then should be harvested, brought in, and left for a couple weeks more.
At that point, you need to scoop out the seeds and gel into a small container like a cottage cheese container. You need to let the seeds fement for a few days.
Then at that point, you need to dump them into a mesh collander and rinse them until all that is left is seed.
The seeds should then be placed on a plate with paper towels, spread out, and left to dry for a few weeks.
Remy