To answer your questions:
1. Yes - Put the full tuition amount listed on the 1098-T. As you indicated, the scholarship amount will be subtracted later in the calculation.
2. Line 17 instructions state:
If you have a distribution from a qualified plan, you might be better off using your education expenses to claim a tax credit rather than excluding from income the distribution from the plan. Enter on line 17 the amount that you choose to use for computation of a credit instead of an exclusion. For example, since the first $4,000 of qualified expenses may generate an American Opportunity Credit, you may choose to enter $4,000 in this field. The resulting tax credit may be more beneficial than the forfeited exclusion from income.
@dhotop
