Answer to Question 1
Answer: If a body is more dense than water, it will be heavier than an equal volume of water. This means the downward force of gravity will exceed the upward buoyant force that acts on it. Net force will be downward, hence the denser-than-water body sinks.
Answer to Question 2
Answer: The levels of water in the two Falkirk caissons are the same whether a boat floats in them or not. As Figure 5.16 in your text shows, the weight of the container will be the same no matter what the weight of the object(s) floating in it. The floating object displaces a weight of water equal to its own weight. So whatever the weights of the floating boats, the two caissons weigh the same and are balanced.