Ooh! Now here's a topic! Nazis, crazy power-mad philosophers intent on world domination, a secret treasure - could it be the plotline of Indiana Jones V? Well, apart from the secret treasure part (I made that up so it would fit better). This might be a long post, I'm afraid...
The interview with Kerry Sanders you link to is very interesting, and it does a pretty good job of debunking many of the 'Nietzsche was a Nazi' myths. Perhaps it's worth summarising these and adding a few:
1. He was not literally a Nazi. Perhaps this is obvious, but it is still worth pointing out. National Socialism began in about 1919, and Nietzsche was dead by 1900 (when Hitler was only 11). In fact, N's last sane year was 1889 - the year Hitler was born (conspiracy theorists - make of that what you will!).
2. He was not an anti-semite. N was critical of Jewish culture, but no more so than German culture, Christianity, modern philosophy, and so on. At one point in BGAE he actually states that interbreeding with the Jewish race is essential to the future of the German people and Europe itself (see section 251), where he also apologises for his own previous anti-semitism. Also, he fell out with his sister over her marriage to an anti-semite, and also with Wagner, partly because of the same.
3. He was not a nationalist. Nietzsche thinks of himself as the "Good European", who combines together all that is best about European culture. He also thinks nationalism is a stupid and restrictive attitude, which can be linked to indigestion (outside influences come in, and the country feels threatened, and rather than 'digest' them, it trys to 'vomit' them up).
4. He did not believe in the Master Race. This idea is Hitler's distortion of Nietzsche. The idea of master morality is used by N to show that every culture will develop an artistocracy which represents what is best about itself. Initially, this may be brutish (the strongest prevail), but eventually it also develops into what is culturally healthy and spritually sophisticated (refined) about the culture. Thus, N sees this as a natural process, and here he has similarities with Darwin (to an extent), in that each species will try to perpetuate its own type. However, whereas with Darwin this is down to random mutation and natural selection, N believes in a vital power in the thing itself (its own will to power - of which, more in a second). In opposition to this, slave morality is that which justifies and helps to make tolerable the lives of those who are less powerful. Nowhere does N say that they should be 'weeded out', or that they are a distinct genetic type. However, he was a eugenicist (to an extent), and so he does draw a link between culture and genes - but also with background, environment, education, etc. - so, he was not a genetic determinist (which, arguably, Hitler was).
5. The Will to Power does not mean 'might is right'. Will to power is just a fact of any organism: a daisy or a humming bird has will to power just as much as a lion or a bull. So, dominance through strength is just one expression of a type of will to power. However, weeds can survive by a different type of strength, and other qualities can be expressions of will to power to.
6. He did not deny compassion or love. N rejects pity when it springs from a view that we are all weak fellow sufferers. However, if compassion springs from strength and an abundance of creativity and health, then it has more meaning. N also sees love as one of the highest expressions of human nature, and romantic and ideal (chivalric) love as a step forward in human evolution.
7. He valued suffering, but in relation to self development. Partly because of his own experiences in life (he suffered from severe migraines which lasted days), he developed the attitude that suffering 'enobled', and made us appreciate life more profoundly. So, much of his philosophy is built on the idea that we must suffer and overcome ourselves in order to develop. This idea is perverted in Nazism in the attitude cultivated by the SS and the guards in the concentration camps: that it is necessary to turn one's back on feeling and compassion. However, the 'greater good' for the Nazis and Nietzsche were very far apart: N saw suffering as a means to a positive philosophy of life (the eternal return), whereby even the most wretched experiences can strengthen us (what does not kill me makes me stronger); the Nazis inflicted suffering on others, and saw the future not in terms so much of self transformation, but of changing the external world (ridding it of Jews, liberals, communists, etc.).
Once again, sorry for the length of the post - perhaps we can take some of the points and discuss them in more detail?