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About the hyphenation - you are half right and half wrong
You are right that LaTeX by default will not hyphenate already hyphenated words. However, as always, there is a package to correct this behavior: hyphenat.sty
I have made a demo just for you!
hyphenat.sty should be part of any decent TeX installalation. If you have teTeX, then you can just type "texdoc hyphenat" to read the docs. Also, see the FAQ:
As for the overfull hboxes, if you use AUCTeX in emacs, you can turn on debugging of these with "C-c C-w", then they will show up as compilation errors and emacs will jump to the corresponding source line as you step through them.