1. The Germans were hopelessly behind in the development of the abomb, and they didn't really pursue the issue very strongly or intelligently. They were lacking several basics, both in terms of scientific knowledge, as well as the material ressources needed. This was actually discovered while the American abomb was still in development (although it was already nearing completion IIRC, maybe testing had already started). Yes, the initial motivation was to develop the abomb before the Germans finish theirs, but that was based on the assumption the Germans actually were close to developing their own, which later turned out to be false.
You are correct about the state of the German atomic project(s) at the end of the war, but the American project was founded on what was then a very real fear that Germany could build a bomb quickly. It's a little hard to imagine the situation in retrospect, but in 1940 Germany was the most likely candidate to succesfully produce a weapon.
First of all, building an atomic bomb wasn't really a question of theoretical physics at the time. The fact that it could be done was figured out many years before the war and was essentially common knowledge to anyone with an understanding of more advanced physics at the time. The bigger problem, which was a massive one, was engineering--how do you actually build the bomb, how to you produce the materials required and so on.
Then you have to understand that pre-war Germany was the center of the physics world. If you were a noted physicist in the 1920s, you went to Germany. Think of it like Silicon Valley for computers or Hollywood for movies... but with more prestige. Germany and the cutting edge of physics were synonymous. Then, of course, Hitler turned Germany into an engineering powerhouse, with a massive production capacity to support his war goals.
A great many scientists saw the writing on the wall and they left Germany for England and the United States, bringing with them a firm belief that German was in the best position to build the bomb. German universities had the best theoretical science work and the fear that the new war industry could be applied to the engineering rpoblems was intense. (Germany also made a number of suspicious but possibly benign moves early on to buy up and confiscate mass quantities of uranium in conquered territories... which was a red flag to foreign observers.)
The American Manhattan Project that ended up building the bomb owes its roots to one of the scientists who fled Europe after Hitler came to power, Leo Szilard. He set himself to proving to President Roosevelt (personally!) that the United States needed to develop the bomb to counter a German weapon. Not to bomb Germany first, but to prevent anyone from claiming an advantage. The United States studied the issue and ended up deciding it was a legitimate threat and that massive resources needed to be devoted to the project...
The German effort fell apart for lots of reasons, but not necessarily scientific knowledge (one team, resource-strapped as it was, was very close to starting their first reactor). There were two competing projects that fought with each other over resources, the war used more and more resources as it went worse for German... and unlike the United States, the military infrastructure wasn't there to use the bombs as a weapon (German military doctrine favored light and medium bombers instead of anything like a Superfortress, for example). More importantly, Hitler just wasn't interested. The bomb projects didn't have a great spokesman, like Doctor Oppenheimer was for rockets, who was able to capture Hitler's imagination... and in a dictatorship, getting the massive portion of industry needed to refine Uranium in the 1940s was impossible without the top man's support.
More importantly, the United States didn't believe that the German effort could be as bad as it was, given the advantages they started the war with. A special operation, Alsos, followed Allied troops into Germany to study the situation and gather any valuable research and material... and they just didn't believe how little there was. (More amusingly, the Germans didn't believe the US had gotten anywhere, either. Dr. Heisenberg's team surrendered expecting to be given good treatment by promising to tell the Allies the 'secret of the bomb'... instead the scientists were locked up in England where there conversations were recorded for weeks just to establish they were really as far behind as it seemed. There was genuine surprise when the bombing of Hiroshima was announced on the radio...)
2. The thing with the Japanese is more complicated and I think there's still some controversy around it. But the Japanese were at least extremely close to surrendering, even without the bombing of Hiroshima and Nagasaki, and it even appears they already tried to surrender, but it failed due to communication failures. Weren't there something about the Russians not forwarding the messages because it was in their interest that the war continues? (At that point Germany already had surrendered, so all that was still going on was centered on Japan)
it's something that is debated to this day and it probably isn't clearly one way or the other.
One side argues that the decision was made to prevent American deaths in an invasion of Japan and the other says that it had a lot more to do with stopping the Soviets than it did with ending the war. Japan's back was certainly broken... but it was in similar shape a month earlier at Okinawa and inflicted massive losses on the US with suicidal. A two-part invasion of the home islands was planned and there's little question that it would have been costly... but the figures thrown around for *how* costly by those defending the bomb were actually decided well after the war. Russia was a huge issue in Europe had just entered the war against Japan with the Red Army was on the march into Japanese terriroties in mainland Asia... but this was also something the US had been actively lobbying for for years.
The fact is, though, nothing in the historical record says one way or another. Everything you find (minutes of the targeting committee, memos on the subject, etc.) simply treats the fact that the bomb will be dropped on Japan as an inevitability. Maybe that's what it was--billions of dollars and an impossibly huge effort built a bomb and maybe no one considered it wouldn't be used.