To answer your questions:
The master will install on itself, then transfer and install on slave and then reboot the switches. You should be able to follow the process until reboot.
1.) based on the release note it should auto boot everything : you can check with "show boot system" Just double check your boot variable is set correctly. packages.conf
Subinterfaces are used on routers and they can be used on some L3 switches. You need to configure the physical interface as a routed port or L3 port using no switchport, exit its config and then you can configure a subinterface.
On the 3650 series, VLAN subinterfaces on routed ports are not supported:
I was finally able to test it in the production environment at my company and can confirm that no USB was necessary, despite the "Major Stack Protocol Version Number Incompatibility" - it was still possible to access the flash of the mismatched member from the master of the stack.
As for the auto-update feature, I must say that we only use bin ...
Trunking VLANs enables each of them to span multiple switches.
You need to configure all four ports between the switches as trunk ports (assuming they're access ports right now). If they already are in trunk mode you need to permit the VLANs 1 & 2 across those trunks.
If you can't sort it out please add the switch configs to your question.
It seams you are need to Configure InterVLAN Routing - I believe it can be done with 3560 you have. Try ip routing command - and if possible go to https://www.cisco.com/c/en/us/support/docs/lan-switching/inter-vlan-routing/41860-howto-L3-intervlanrouting.html to get full instruction