I am starting to drywall tonight and the thought occured to me that the outlets are only 1/2" from the wall. I purchased outlet extenders as I am double 5/8" drywalling. Do I put the extenders on first before the first level of drywall or after the second sheet goes on?

After the 2nd sheet goes on. You don't have to use the extenders until you're ready to install an outlet, switch, etc. You will also have to use extra long screws from the extender to the outlet box.