I fixed problem #1 and it is strange. There are 4 connections between my 16F628a and the U2 programmer. With the GROUND connection hooked up, I get the error and no download. With the ground connection DISCONNECTED, I don't get the error and I can program the MCU everytime! Just to be clear, I have a 5 volt power supply to my circuit containing the 16F628a, and my U2 programmer connected by USB only without the ground wire connected in anyway to my circuit or power supply. Hey, it works! I checked lines with a meter and scope and see nothing wrong (no shorts, opens, noise issues).

On to #2 problem.