Ok , I read that when Costello survived the attempted murder on his life, he was demoted to soldier status by Vito Genovese before he retired. My question is, how the hell could someone set up the boss and NOT be successful, and have the balls to step up and say "you were the don and now im making you a soldier punk!" and get away with it? I know Costello "got the message and didnt wanna deal with it" but was he that much of a Prime Minister to not retaliate or have men to wanna do so for him? He was the don of a powerful organized crime family, not a pussy.

Costello wasn't demoted.
After Charlie Luciano was convicted of Mann Act (white slavery) violations and sent to prison in 1936, he put Vito Genovese in as figurehead leader of his family, while he actually ran it from prison. Then Genovese fled to Italy to escape a murder rap, and Costello took over. After WWII, when Genovese returned to America, Luciano told him that he'd be subordinate to Costello.
But Costello was nailed for contempt of Congress and for tax evasion in the early Fifties, and his power began to wane. Genovese made his move in 1957, ordering Chin Gigante to attempt to kill Costello, and conspiring with Carlo Gambino to whack Albert Anastasia, who was Costello's prime ally in the New York Mafia hierarchy. Costello wasn't demoted to soldier: he got the message that his time had passed, and he retired. Then Genovese took over.
But Costello had the last laugh on Genovese: he and Meyer Lansky set Genovese up in a major narcotics deal. They then paid Nelson Cantellops, a Puerto Rican drug dealer, $100k to testify against Genovese. He was convicted, sent to the Federal penitentiary at Atlanta, and died there.

Thanks Turnbull, I knew you'd come thru for this question seeing as how Costello is your favorite .