Is that exactly what it says?
For the first question, I'd say that you are to continue to put the k3 at each end of the row and they want a p1 before you begin the K5, P1 repeat. So you always do it as given. I suppose on return rows you must do what appears, in other words if they face you as purls, purl them. If they face you as knits, knit them. This will keep it in ribbing.
The second question is the weird part. You start working with the MC and it says to rib as set for 18 inches. Then, "At the same time, work 10 inches in MC end with a WS row then work color pattern." I guess what is happening is that all of the 18 inches are in the rib pattern, but after 10 inches of the MC you start working in some sort of other color pattern. Maybe CC stripes or something. So that would mean work 10 inches of the rib in the MC then beginning with a RS row start another color pattern that it must tell you about there somewhere, but keep to the rib pattern you have going. Does that make sense based on the picture of the sweater?