1:-The setting is there,under advanced tweaks in settings tab & it does work.I too had that issue on xp a while back however it may have been because i didn't check the option was ticked,until i saw your question i never gave it a 2nd thought i just accepted it was broken..lol..Tho i coulda sworn you could move the mouse over each tab & it would activate each tab as you moved as well

2:-No such setting exists & would most likely make it pointless to have tabs,it would i assume require a re-work of od for the tabs to stay static while the icons slide under the tabs ,either that or the tabs themselves would be hidden once it retracted as they'd be on the top bar of the tab.

edit:just remembered there is a flyout thingy it would make a good alternative i had no idea it worked with tabs as well

 https://www.wincustomize.com/article/163569