UPDATE:

I tried the phone on another amp connector to my KSU issue 2 is resolved..

It must be some type of feature that the line stays lit when you hang up the headset until you push the clear button at the top to release the button. I did find out that the line does disconnect when you hang up the receiver but the line lamp stays lit.

Also I found some type of relay/switch behind the dial pad and it clicks when you push a button for a line, so I don't know if that has something do with the lamp not going out when you hang up the receiver.

Still need help with the buzzer.