1 - No, there is no other way to scroll through the list of artists. You can narrow down the search by selecting a genre first, though. And you can also use itunes to build custom playlists using the first letter of the artist for the name of the playlist, one for each letter. Or re-working the genre setup so that for all song's who's artist's name begins with A, the genre for those songs is also A. These workarounds have been covered numerous times in topics on this board. In fact, I myself have probably posted some variation of this message at least 5 times.
2 - The menu button on the D3 works exactly like the menu button on the ipod. It brings you back 1 menu. As long as the car has been on, it will bring you back one step. But if you've navigated through some menus and then have turned off the car, when you turn everything back on, the D3 can't remember how it had gotten to where it was on the ipod, so the menu button won't do anything. Basically, the menu button will work until you shut off the car. It won't have a function again until you've navigated through some more menus.