Couple quick questions from a newbie...

1) I noticed that the chain rubs the derailer in gears 1-3, but when I adjust it (using the top screw closest to the frame), the chain starts to rub in the higher gears. Is there a way to alleviate all the friction? It doesn't seem possible the way things are setup now.

2) There are 2 adjustment screws on top of the derailer. The one closest to the frame obviously moves the derailer laterally. What's the 2nd one for?

My bike:
KHS Flite 750
Ultegra Derailers

ETA: I did find this article at Sheldon Brown. Very helpful.