I have my 2 wire VSS hooked up a little differently. The stock VSS is located inside the speedo. The wires go from the back of the speedo to the VSS buffer which is located near the left edge of the climate control and well hidden. I've pulled it down in the picture. The wires that ran to the speedo are the black, red and green wires on one end of the VSS. Simply cut those wires and tap into the black and green wires going into the buffer. The red wire isn't used.
3 wire yes to the orange on #2.
Think of the 2 VSS's as never talking to each other. The 2 wire talks to the ECM and cruise control. The 3 wire only talks to the new speedo.