I am new here and have many questions that probably have very simple answers, I hope.

My hybrid had 700 x 35 tires, I put on 38, but they are too heavy, can I fit a 32 size on these rims. I saw a Michelin Dynamic, is this a decent tire for under $20?

The bike, a Raleigh dash is about 20 yrs old, when I am in some gears, lower ones where I am putting alot of pressure in my pedal going up a hill, I hear and feel a a bump( no slip), its either in the chain or freewheel. What should I do? No stress on the pedal its ok.

Thanks