Put the following in ~/.asoundrc
That should enable software mixing in ALSA. Then go into GAIM, and into Preferences -> Sounds. The 'Sound method' should be 'Command' and the command should be 'aplay'. (aplay is a command line audio player that uses ALSA natively). Then go into the preferences for XMMS, and make sure the 'Output plugin' is the ALSA one. You should now have GAIM sounds playing over XMMS.
As for problem 2, try using 'alsamixer' as your mixer. Turn everything up, and select the mic channel for capture (hit the space bar when the correct input is selected and it should toggle capture on and off).