First, when talking about web design, the Z-Index is a positing element used in CSS and has nothing to do with the values in your dropdown.
Secondly, the reason you got an error when you tried to place an item at index 1 is because if you don't have a value at index 0 hence index 1 can't exist.
Lastly, call your Insert AFTER you have databound the control to its datasource. This code below works as it is expected (C#)
protected void Page_Load(object sender, EventArgs e)
My ddl, when rendered, has a blank entry and then the element foo.
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