For question number 1, see http://robindotnet.wordpress.com/2009/08/19/where-do-i-put-my-data-to-keep-it-safe-from-clickonce-updates/
For the second question: include a table in your database with a single row with a single value to indicate the current datatbase schema version.
One each launch of your app, check that the version is the expected, potentially newer one, and if not, for each missing version Count, run ALTER TABLE and CREATE TABLE statements to bring the database up to date. Remember that a newer app might need to upgrade the database several generations.