I'm going to answer your first question in two way which might be contradictory.
First: Boil however much water the instructions with your kit say to boil. (I'll return to that later)
Second: Boil 2 to 2-1/2 gallons since you don't yet know how it will behave when it gets boiling.
OK, back my first answer. While I'm a huge proponent of HBT and I think it's great that we all have this resource available, your first few batches of beer are really about learning the process, getting used to sanitizing and figuring out a workflow that works for you in your kitchen (or wherever you brew). And the kits are great for that! There's no measuring or weighing; the instructions were written to make your beer successful so you'll come back and buy more kits.
While I've gotten lots of great advice on HBT, as a beginner there's a real risk of "too many cooks in the kitchen." The truth is, there is not one single best way to make beer - however there are lots of wrong ways. So when you're not entirely sure what you're doing to begin with, and you've got all these more experienced brewers telling you to do this or that - and none of them agree - it's easy for you to get confused and wind up not learning a process that works for you. Additionally, in the confusion there's a greater risk of your beer not coming out well as things get misunderstood or forgotten. So that's why my default answer is going to be follow the instructions with the kit.
To your 2nd question: Does the pot smell like crab? If not then I wouldn't worry about anything other than making sure it's clean. If it does, try filling it with water and adding some OxyClean Free (the unscented one) or it's generic equivalent, and let it soak overnight.