8 months' overstay is a 3-year ban. But the ban being over doesn't mean a guarantee of getting a visa. Indeed she may never receive another non-immigrant visa with her history.
No, the court can only force a decision. The court doesn't approve or deny. The court issues an order to the DoS to render a decision. The DoS then obeys. The decision can be denial, it's up to DoS.
This is routine, I was also told this at my N-400 (not combo) interview. Often they have to get a supervisor to check everything before they can approve.
I don't understand #1. How can an EO overwrite the Constitution? Doesn't the Constitution state whoever is born in the US and is subject to its jurisdiction, is born a US citizen?
Your husband ultimately has to prove to Immigration Court that his first marriage wasn't fraudulent and USCIS denied his applications based on his first marriage in error. Without this, the new application based on the 2nd marriage is bound to be denied.
There's nothing unusual about this set up, in fact, it's good evidence that she contributes to a joint account which is then used to pay bills! Prove this with documents. Prove it happens every month!
USCIS is fine with it if you re-file. There's no deadline on filing an I-485 after K-1/K-2 entry & marriage (although ideally one does it sooner rather than later).
While the 90-day period expired, a spouse of a USC can file for AOS even with an overstay.