Answer to Question 1
Red is used to move the texture to a specific location. The green pin is used for scaling and rotating. The blue pin is used to stretch or condense the material.
Answer to Question 2
From the main menu, choose File / Import, and specify that the image will be imported as a texture. On the face you want to paint, click two corner points, which defines the image's size, and the image will tile to fill the face.