Q1...yellow/red goes to the starter relay, so it will disable the starter.
Q2... If you remove the old switch with its 3 wires, the black and black/red you disconnect in the h/l shell ( coming from the main loom ) need to connect together.....in other words remove old starter switch, undo the 3 wires , leave yellow/red ( from loom) as is...put black and black/red together ( ones from loom ).....hope that is clear !! black to black/red will connect the h/l, which will now come-on with ignition turned 'on'.