Thanks! I'll check it out.
1) Yes, 'Xiao' is a term used for a younger sibling/kid. She's calling Fu Bing = Xiao Bing (replacing the surname with the endearment). There are also a few others that you'll see in the game: repeating the name twice (Da = Da Da) and adding 'er to the name.
2) It's a typo, will fix