For # 1 - It does sound like your electric element is on. The swithc for that is a toggle switch like the one on the panel, but its located on the heater itself. Open the metal door and you should see it. Keep this turned off unless you are using it. If that is on and there is no water in the water heater, it will fry the element immediately. I always run the HW first to purge any air before turning it on. The blue lighted switch is the on/off for the propane heat to the water heater. When you don't have an electric hookup, you use that. When you do have electric, you can use either one - or some people will run both for faster recovery if you are using a lot of HW, like for showers.
As for the grey tank, any rv chem that you would use in the black tank is fine for the grey. We found out pretty quick that dish water can get pretty stinky. Since we starting adding some liquid tank treatment chemical to the grey tank we haven't any more odors.
If you get a chancce, post a pic of the bunk door gasket. Sounds like a concern if it is pulling away from the frame.
2005 F-150 FX4
2013 Rockwood Roo 23 IKSS