Hi welcome to the forum lots of nice people here willing to help. This MY solution to your situation many people will have other ideas.

I find the best way to check for leaks is basically put the boat in the bath force down on it and see where leaks spring up. Rub down the varnish on the hull, doesnt have to be bare wood but get most of it off.
IF there huge gaping holes in the plank work apply SOME resin dope arond the area
inside the hull and patch the hole with a peice of tissue precut to size. Not toilet roll, the craft tissue. you can get it from wilko or pound land its in the craft areas. with the tissue in place make sure its flat and not got any creases in it, then apply resin over the top to laminate it. leave it to dry preferably overnight then rub it down lightly and apply another coat of resin on it.
Apply resin dope to the exterior of the hull, paint it on then leave it to dry. rub it down to give it a key and then repeat the process twice again. On the last coat give a light sanding so the finish is smooth. this will seal the hull. When it comes to painting i use humbrol but then thats because i cant spray. As long as the paint isnt waterbased then either willl do.
If you havent got any big holes and just some small pin hole leaks dont bother with the tissue on the inside. Resin goes off very fast and can rubbed down after a couple of hours dependin on how thick you lay it on, so you might be able to get it all done in a day.
as far as the switch is concerned i have no idea. my best guess is its for binding 2.4ghz radio but id sugest if possible asking the guy who built it in the first place what it is. maybe post some pictures of the boat will help.
make sure the props and couplings are tight on the propshaft and that theres no slippage between the props and the motor spindles. I had a gearbox on my 600 motor and the prop shaft was slipping on the gears. it had no grub screw so i did away with it entirely and drove my the prop shaft directly on the motor with a coupling. needed to make propeller small though due to overheating issues but thats another story, if it still has problems then post again

good luck