Q2: How does a story get added to a sprint? Do..

Yes, This is correct. Work can be brought into the Agile team's backlog in a few ways including tasks assignments from project, requests routed to the team, and stories submitted directly to the backlog by team members / leaders. Once a work item is in the backlog the team can collaborate on sizing the work and breaking it down into subtasks if needed. The team can then prioritize the work and prepare for the next iteration.

When setting up the Iteration, the Team / Pod can select the work items for the iteration. Workfront will tally up the total number of points of each item and let you know if you have any left over capacity OR if you are trying to do to much! As teams go through multiple iterations they will become more predictable over time and will have a very accurate capacity number to plan with.. Do you use the iteration capacity during sprint planning? Do you use a velocity report? Love to hear some examples!