For your first question, when you're at the app's main screen (the one you're in when you first enter the app), tap the gear on the top left. A menu should come up on the left, and under the "Play" section there should be a gapless playback switch.
As for your second question, no unfortunately it isn't possible, as this is a bug that FiiO themselves have said they will try to fix in a future update.
actually, gapless fails for me in v2.0 as well, and i believe this too was acknowledged by FiiO.
Currently the gapless might not work for some lossless formats, and we're still analyzing it.
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