Ok, I switched “Show single posts on user profile?” to no, and it seems to sort of mimic the behaviour I wanted in question 2 now, and address a few other questions I had. So I may be ok with this as a non-logged in user can browse the blog without seeing the user profile, or the templates it uses for posts and archives.
I am not really sure if this addressed the issue, or me setting up a buddyblog folder with templates in my theme (instructions I saw in another post). But suddenly things are working well.
if it was the “show single posts…” option that did it, that function isn’t super well explained in the admin. I wouldn’t have guessed what setting it to no would have done.