1. FSX works off of the highest resolution mesh getting rendering priority. Only if you have two or more of the same resolution does layering in the scenery library have an effect, with the higher scenery layer (lower number on the screen) taking priority. Placement in the library is your choice, more often than not. But if you have an add on for Florida that has mesh and other work and the install calls for two separate scenery layers, one for scenery and the other for mesh, isn't it easier to find both if they are grouped together? Mesh below the scenery is what I advise.

2. See above. If it has a higher resolution then it makes no difference where the scenery layer is or should be.

3. Once you've clicked the Move Up or Move Down button you can use the keyboard to repeat the directional move, as in 'D' for down.