This is probably caused by using virtual box, in that the launcher in 12.04 behaves based on how hard you push it open.  In your case that's causing the pointer to leave the window.  I'd probably just recommend leaving it open.  You can adjust that setting and also the reveal sensitivity in the "Appearance" control panel on the "Behavior" tab.

2.  I cannot find any way to Show the Desktop.  I have never been able to do this in Unity (or in Gnome on Linux Mint).

It's on the Alt+Tab switcher, first item.