Herbs are almost always better taken on an empty stomach for better absorption. Proteins and fats from diet can interfere with the absorption of some nutrients, and slows the absorption of nutrients. I generally take herbs at least 20 minutes before eating.
As for pau d' arco (lapacho, ipe roxo, taheebo), I have used the powder numerous times for inflammations and infections with great success. Pau d' arco contains 18 antiseptic anthraquinones and napthaquinones and 5 anti-inflammatories.
Pau d' arco is most effective when combined with sulfur bearing herbs. Traditionally yerba mate' is used, though I prefer to use chaparral, which is also antiviral, antibacterial, and antifungal. Chaparral also helps raise vitamin C in the adrenals, which helps support the immune system.
I don't recommend tea bags. Tea bags inhibit the flow of water reducing extraction. And if you make a tea from the loose bark remember that it needs to be boiled rapidly for about 20 minutes, not just simmered or steeped.
Recommended dose is 1/2 tsp 3 times daily on an empty stomach for the powder. It is best to switch to something else after a month of use to prevent a resistance from building up. And because of its high iron content it needs to be avoided in people with hemochromotosis. The only side effects of high doses are diarrhea and some blood thinning. Some people develop allergies to it as well.