CMD - If exists <file> - redirect

Question

The below commands (with debug lines added - indented) should only redirect the echo's output to a file, should it already exist, according to my understanding.
However, it would seem that if exist %test0% always fills the file (creating it if non-existant) with the echo's output.
Does anyone know what is wrong?
#echo off
type test.bat
set test0="e:\documents and settings\administrator\desktop\test.log"
echo.&echo.
if exist %test0% (echo !!Exists!!) else (echo !!Doesn't Exist!!)
(if exist %test0% echo.&echo.&echo -------------------------------------------------&echo.&echo.)>>%test0%
And the file gets created(!)
EDIT: This above was a simplified example, and unfortunately MSalters answer doesn't help me solve the full command (I had hoped it would). The full one line if statement is:
if exist %test0% (echo.&echo.&echo -------------------------------------------------&echo.&echo.) else (set /p .=<nul)>>%test0%&set errorlevel=0||set errorlevel=1
How would I have whichever condition of the if matched output to the file (Hopefully with only one reference to the file, i.e., not one in each if conditional), and have the errorlevel set based on the existance of the file?
Could anyone help with the actual full command issue?

Answer 1

You should never set ERRORLEVEL directly. That name is reserved for reporting on the results of the prior command. When you set the value directly, you override the intended functionality and it ceases to expand to the actual ERRORLEVEL, it expands to the value you set instead. That can break all kinds of code.
You can force the ERRORLEVEL to a value by running a command with known result, redirecting output to nul if necessary: ver >nul sets ERRORLEVEL to 0, set /p .=<nul sets ERRORLEVEL to 1.
You can force the ERRORLEVEL to any particular value of your choosing by using cmd /c exit /b N, where N is an integral value.
You also have faulty logic. Your IF command succeeds (has no error) regardless whether the condition evaluates to TRUE or FALSE. If you want to set the ERRORLEVEL, then you need to do it within your parenthesized blocks.
There is nothing wrong with putting everything on one line, but I find the code easier to read when using multiple lines for complex statements like yours. I believe the following is what you are looking for.
if exist %test0% (
echo.
echo.
echo -------------------------------------------------
echo.
echo.
ver >nul
) >>%test0% else (
set /p .=<nul
)
Edit in response to comments
Not much change needed.
if exist %test0% (
(
echo.
echo.
echo -------------------------------------------------
echo.
echo.
set ERR=0
) >>%test0%
) else (
copy nul %test0%
set ERR=1
)

Answer 2

Check your parentheses. (x) >> output.log redirects the output of x to output.log. That means the redirection happens regardless of what the output is, and in particular always creates the file.
Now if you'd write if Y (echo Text >> output.log) the redirection would be conditional on Y, and might not happen.
[edit]
With the question as it's worded now, the simple solution seems to be:
Set %ERRORLEVEL% based on exist %test0%. No redirection has happened at this point.
Use %ERRORLEVEL% to determine what to do. You can change %test0% without altering %ERRORLEVEL%.
BTW, ERRORLEVEL is not %ERRORLEVEL%