1. I think this thread might be of some help. /showthread.php?t=3853
2. Yes, you can specify the Featured Products to pull from a specific category. Just go here: The Factory > Your Store > VIEWS > STORE FRONT PAGE > Default > Product List module and click the settings (
) icon. From there, choose "Use custom query" under the Product selection field and then input a category to choose products from like this: c=736292 (where 736292 is the Category ID of the category you want to select from).
You can get the category ID by clicking on the category and looking in the URL like this: