Both your questions are functions of the safety interlock assembly mounted on the side of the control valve.
Oil cannot pass through the interlock in either direction unless pressure is being developed in the system by the hydraulic pump. The purpose is to provide a hydraulic lock on hyd cylinders when the engine is not running to prevent accidental drop of the loader, hitch, etc.
The internal parts of the interlock consist of a plunger and 2 steel balls with springs which are moved off their seat under oil pressure depending on the direction the control is stroked to allow for flow of oil to or from the cylinder(s).
The control valve(s) are double acting. The same interlock is used for both double acting and single acting but must be setup for one or the other application not both simultaneously.
This modification is simply a 1/4" npt countersunk plug that is installed in the center port for DA or left out for SA. The interlock must be removed from the control valve to access the plug area.
Your interlock is obviously set up for SA, otherwise it would not function at all. The pump (thus the engine) is probably laboring due to excessive back pressure caused by the interlock plunger not fully uncovering the return port, restricting the oil flow.
To check the BP, connect a gauge to the opening that is presently plugged on the side of the interlock block adjacent to the hyd line to your cylinder. Normal BP is 0-25 psi for most applications but should not exceed 75 PSI.
There are several causes of high BP, including sticky plunger, worn internal parts, new style chamfered plunger installed backwards, incorrect clearances, etc. A clearance 0.020" - 0.050" between the seated balls and the plunger ends must be maintained for proper function. This can sometimes be corrected, trial & error, by adding another gasket or shimming one or the other, or both, end plugs on the block.
Other than that, it is teardown time. Read up on it in your service manual first.
You're probably using the upper control valve for the loader. Should be setup like the lower control valve in the 2nd pic.
If you live anywhere near Williamsport, you might want to contact Roger Hornbaker. He restores gauge clusters, fabricates other parts for 300. Nice guy, anything he doesn't know about 300's is not worth knowing. email@example.com