1. I have no solution for you and it is not on me to come up with a solution for you. Server side code can only know the size of a file after it is uploaded so we can enforce disk space quotas but not prevent a user from trying to upload a file that might be too large. It is a difficult problem to find a way to determine the file size on the client machine before uploading, if you google for "asp.net determine file size before uploading" you can learn about the problem and various approaches to the problem none of which are easy or ideal.
2. I've just pushed a change that corrected a mistake in mojoPortal.Features.UI/Web.net35.config you will need to get the latest changes and then to use .NET 3.5 you need to copy the contents from the file mojoPortal.Features.UI/Web.net35.config into the corresponding Web.config.
This will solve the problem about the Update panel in the designer file.
Once you modify any mojoPortal code it is on you to solve your own problems and make it work, you should clone it not modify it directly and then the same applies, it is on you to understand the code in your clone and how to solve your own problems, I'm not here to do that for you and am not interested in supporting your clone or your modifications to mojoPortal code. I have enough to do supporting the official code and the features I ship. You may ask for help but I am under no obligation to help with every problem or goal you may have so do not have the expectation that I will help. If it is something I can easily help with I may help but I am very busy with my own work.
Best,
Joe