#1 – If you imported the demo content it would of imported a page entitled Blog. Which is why ti is working. You have to create a page and set it as the blog when you first setup the theme.
#2 – Can you provide a screenshot? You could always use an image which is vertically longer. That is most likely the issue.
#3 – That is because you imported the demo content, you will need to edit your menu. Read this http://support.themely.com/knowledgebase/setup-navigation-menus/
I hope this has helped you.