1) A "deemed" IRA is where an employer allows the employee to ALSO contribute to an IRA, in addition to the employer plan (such as a 401k). 

From the employee's perspective, it is a convenient way to contribute additional funds to retirement because it is all in area/brokerage with their employer. 

For tax purposes, it is treated just like any other IRA.  The contribution is NOT on the W-2 (except probably box 14 for informational purposes), so we enter it like any other IRA contribution.

2)  Maybe/probably.  If the employee's income is within limits for contributing to an IRA, YES, they can also contribute to the IRA, up to the maximum $6,000/$7,000 (assuming they meet the regular requirements, such as having enough taxable compensation).  Contributions to a 401k do not reduce that amount (for a Traditional IRA, be aware that an employer plan sets income limits for whether or not it is deductible or not).