The textbook Music Notation: A Manual of Modern Practice by Gardner Read answers your first question as follows:
When slurs are placed over a passage that ends in a tied note, the slur sign should extend as far as the second note of the tie, rather than end of the first note. The principle involved should be obvious; the breath of the singer or wind instrumentalist, the bow of a string player, cannot stop at the first note if it is to be prolonged by a tie.
Music Notation: A Manual of Modern Practice, 267
So this would indicate that figure 1.1 is most appropriate, although, I believe the best solution would be to have one slur over all the notes (from the E to the second C).