i followed osmium version of reductive amination (a la round bottom) using anhydrous ipa instead of MeOH. now starting workup and am a little confused on the removal of the large pile of al/hg sludge at bottom of flask. do i filter sludge out before basifying with KOH or does the basification remove this sludge?

You must filter it out with vacuum filtration.
Really, you should familiarize yourself with Shulgin's basic method at least to learn about simple steps like this.  You may not be using Shulgin's method to prepare the ketone but you can get simple steps at other points.
Otherwise you'll just have people nagging at you to UTFSE

either will work fine.  both are a pain in the ass.

swim prefers to vacuum filter the sludge.  if you choose to do this though, use an aspirator or bee prepared to have a bunch of gaseous meam go through your pump.