Q2: The player has less memory than normal, and restarts displaying "format error" or "disk error" when I upload more than 128/256/512/etc MB
What you can do is to format the player using the tool that came on the the latest version of the "MP3 Player Utilities", available in MP3 Player Utilities. Do a complete format and don't set any encrypted drive.
If this does not help, try the "disk management", reached at "Control Panel -> Administrative tools -> computer management". Right click the mp3 player partition, choose "format". Use "FAT" or "FAT16" (NOT FAT32!)
This is a known problem, and on most of the players, it's caused by a player formatted to handle more memory than the memory chip allows.
If formatting does not help, you should check if the memory chip inside you player has the capacity that the players claims.(see Dissassemble the s1mp3 and Nand Flash memory(Samsung or Hynix))
(there is an ongoing discussion about this in this post