Hello everyone, my first post here!

I've had my bike for several years, and the low height of the handlebars has always annoyed me, i get some back pain bending forward to reach them. I'm long overdue for raising them up a bit.

Although its not the same brand, my handlebar system is functionally identical to this bike:
youtube.com/ watch?v=-iBe1j-cxH4

(it wont let me post links properly, remove the space)

I've spent the past few hours taking it apart and learning how it works, its basically the same as that. Same threading on the wedge, same depressed stem bolt that goes down to it, same nut on the outside, etc. so that gives you a visual aid of what i'm working with.

Oddly enough, i'm lucky to have two copies of the same bike. Because my flatmate has an identical bike to me (same brand, same model, even same colors) so i've been comparing the two to figure out some differences. His bike is a couple years newer than mine.

Anyways, down to business. One problem i've noticed, is that the wedge in my bike seems to be fixed inside the fork. But on his, it's mobile, can be taken out. When i slide it back in it stops at a certain point where the fork narrows.

So the problem:
1. Which of these is correct? Is the wedge supposed to be stuck inside the fork, or should it be removeable? I'm leaning towards the latter. Maybe mine is just rusted in?

2. Assuming the wedge IS meant to be removable, what will stop the handlebars from sliding downwards if the wedge is anywhere but the bottom? say, if the rider leans on them a bit. This seems to be a problem that worries me when raising the handlebars up.
The stem bolts are not long enough to reach the wedge if the stem is raised upwards more than 1cm

Is the constriction of the external nut meant to be enough to prevent the stem sliding downwards?
Or do i need to get a longer stem bolt to be able to raise the stem up?

Also a related issue:
Before i started messing with things, my friend's handlebars were already raised up - considerably. Almost 3 inches higher than mine. However this didn't seem to be working out so well, and he was having some occasional problems with the stem turning inside the fork (and thus, the front wheel not turning) under high force. What could cause this?