And welcome to CoffeeSnobs!
1. The short tube is the return from the overpressure valve. This valve keeps the pressure into the coffee at the required amount by diverting excess water back into the tank. It doesnt need to go to the bottom of the tank cause water comes out of it!
2. Use the double basket, dose right, and make the shot size and cup size that taste best to you. A search of the site will give you lots of tips, but the best tip is "its whats in the cup that counts".