I don't know the answer to #1 to be honest, and there are several more interface questions I have that nobody seems to have posted an answer to...either the questions were too stupid to ask in the first place (meaning I'm dumb) or people think they are stupid questions but everyone's afraid to ask.
Anyway, the answer to #2 is pretty simple though the game takes no pains to actually
explain this to anyone, so here are the free agency guidelines from KFFL.com.
I believe that neither ERFA nor TFA exist in Madden 2005. At any rate, the offer you give the player in the RFA screen is a "qualifying" one. If you don't make it, you stand the chance of losing the player altogether, but you'll get stuff in return.