Hi John,
I don’t know about your problem, but I think it would be helpful if you specify your macOS version.
If I understand your second question correctly, I can confirm that that is indeed possible:
In Ukelele, it’s possible to incorporate two layouts into one layout file, switching with the CapsLock key between the two.
I have done that with Latin and Cyrillic letters: To type Cyrillic, I press the CL key, and for Latin, I press it again to release the CL state.
To be specific: the Unshift and Shift levels produce Latin letters, and the CL and CL+Shift levels produce Cyrillic letters.
The drawback is that it’s harder to type text in ALL CAPS
Also, to better know where one is at, I installed a little Utility that shows the CL state in the menu bar.
But: I made that custom layout before Apple introduced the CL switch between two separate keyboard layouts.
Now, I don’t think I would do that again, because things quickly get confusing, and I have to press the CL key quite long to get my own Cyrillic letters.
So these days, I have a Ukrainian layout from Apple installed and switch between my custom layout and that one with the CL key, and hardly use the Cyrillic levels in my own custom keyboard layout.