I'm unable to answer the most technical questions above... however the only way I know of using nested items is to make them in the Styles palettes - Paragraph styles and character styles.

The frame with the cross hairs is normally for inserting a picture.

The text frame is different. Use the text tool. Click and drag a frame. It will not have crosshairs.

See also what the Help files might suggest.

The names of the Styles would have to be the same in both XML, Word and Indesign.