Hi, Scotgal
1) According to
Hart's Rules it should be James's. (the only time you don't add the 's is when there isn't a stress on the final syllable, going by how it sounds: e.g. Williams', not Williams's because you wouldn't say 'Williamses'
2) Don't let Word boss you about, but, odd as it seems, the conclusion seems to be that shouldn't actually be a question mark there at all. There's a discussion fairly recently on this one here:
http://www.writewords.org.uk/forum/65_137409.asp
Emma