1. As far as I've understood the rule, FC must always be in front until combat, upon which characters can make way. Your example is correct, if you have room in the front rank for characters then they must be in the front rank; otherwise, if you're running 3-wide, such as Ogres do, FC is first rank, characters are second, until combat.
2. I don't know. I thought that once they're in their spot, they can only move via the Make Way rule. I don't believe the BRB says anything about characters being able to move within the unit outside of combat. I'd say no, personally, because fluff-wise, if the characters are moving around and messing about, wouldn't the rank-n-file get all confused? lol

Idk though...