1.Just about any oil will keep your chain running ok.
Thinner oils will dry up or wash out quicker, needing reapplying more often than the thick ones.
I use a thinner one in summer and a thick one in winter for derailleur chains.
Stuff like WD40 is great for releasing stuck items and displacing water, but it is probably not the best for long term chain lubrication.
2.The allen bolt in the top of the stem is adjusted to alter the pressure in the headset bearings.
Here is a link to how to adjust the bearings.I hope this helps.
