Very reasonable questions.
- The grade item was automatically created via the LTI integration.
- I suspect that the grade type should be set to Point. If I understand correctly, WeBWorK reports a ratio of the maximal grade for the activity to Moodle, which translates this into a grade. So if WW reports 0.5 and the maximal grade is 100, Moodle will show a grade of 50. The maximal grade is not defined for Text type grades (which I think really means no grade).
- I don't have direct access to Moodle logs but I will ask for them.