Someone will probably beat me to this post but,
1. Yes, both tubes should be in the water. One is a return line from the over pressure valve.
2. Tamp to the line around the inner surface of the basket. When you get it right the portafiller should lock in with a little bit of force required to turn it. Not monkey-wrenching force, but more than for an empty portafiller. You should get an impression of the shower screen and screw head on the puck.
3. Best to get a custom made one. Look up Pullman tampers. The standard s.steel tampsers are a little undersize (which mine is). A proper fitting tamper makes like easier.