"Question 1) Should I use Cost Basis (reported in 1099-B) or Adjusted cost basis ?"
Ultimately, to determine you gain or loss, you do use Adjusted Cost Basis. Procedurally you're supposed to enter the amount reported by the broker and then adjust the amount such that the reported amount, the adjustment used for the calculation, and a code for the adjustment is shown on Form 8949. It sounds like you've done all that.
"2) Should I also choose 'My Form 1099-B reports incorrect cost basis' for it to take effect?"
I don't know how you entered your sale, using either the RSU step by step interview, or simply entering the original information on the 1099-B entry screen and then correcting that by clicking "I'll enter additional info on my own." (That's the method for "desktop" TurboTax and I assume "online" TurboTax does something similar.) Look at your Form 8949 before submitting the income tax return. If the calculated gain or loss is correct, you show and adjustment and a Code for the adjustment, then you've done things absolutely correctly, however you got there. AS A PRACTICAL MATTER, as long as you've stated your gain or loss correctly - that's really your obligation as a taxpayer - then showing an adjustment and a code just aren't all that important.
To get it right procedurally, then "Yes".
