Generally speaking, the crossover setting on your receiver is dependent on the frequency response of your speakers. THX recommends a setting of 80 Hz, which is where I have mine set - but that is because all of my speakers' lower frequency response is just a bit below that, it is not based on some arbitrary THX recommendation. The point here is to cross over the lower frequencies that the speakers cannot reproduce to the sub, which is designed to handle them.
What kind of speakers are you using? Do you know the specs? Not sure how to answer your second question without knowing more info: I have mine set to 'sub only'. I'm using bookshelf-type speakers, so I don't want LFE going to either of those. My sub is a beast that is built to pound the bejeesus out of my room by itself.
The bypass on the sub is part of your sub's built-in crossover. Since you are utilizing the receiver's crossover, you should set it to its max setting, or 'bypass', whichever it has. This reduces the potential for what's called 'cascading filters', which could lead to significant phasing issues.
The Auto switch is merely a power save feature. Setting it to 'Auto' will allow it to turn off or go into standby mode when no signal is detected. The 'on' setting will mean that it remains on, whether a signal is present or not - of course as long as the main power switch is turned on.
Hope that helps.