Problem #1 - No clear answer
There are a wide variety of variations on Hand and Foot. The versions I've played with people who "know the game" have always allowed a clean and a dirty of the same rank, and never allowed wild canastas. (The two variations I've learned both use the term Canasta for a completed meld; some versions of the written rules use the term books.)
For clarity - some terms:
Clean Canasta: No wild cards, 7 cards (or more)
Dirty Canasta: some wild cards, 7 cards (or more)
Wild Canasta: 7 Wild Cards.
Extending aka Burying: adding cards to a completed canasta
Clean/Dirty/Wild Meld: a group of cards that will become a canasta of the same type when built upon further
Build: to add cards to a meld in order to make it a canasta.
Book: synonym for canasta, also, to collect the completed canasta into a smaller pile, "closing" it.
- Pagat.com, however, says only one meld of a given rank per patnership, and allows wild canastas, and extending.
- Gocampingamerica.com makes no restriction either way on melds, and shows no scoring for wild canastas, and disallows extending a canasta, but allows larger than 7 cards melded before booking the canasta. It also notes the lack of standardization in Hand and Foot Rules
- rummy-games.com does not allow multiple melds of the same rank, but allows wild canastas, and not extending.
- The versions I learned both allow a second meld (see below), extending, and disallow wild canastas. They differ on shuffling protocol, burying of wild cards and wilds per dirty meld. (One allows 3 wilds in a dirty meld, and burying wilds; the other requires a meld to always have more naturals than wilds.)
In the Versions I learned
Yes, you can have a second meld of a given rank, provided:
- the first one is dirty
- you need a clean canasta in order to go out
- you have your partner's explicit verbal permission to make the new meld.
Usually, this happens right after someone goes to their foot.
In versions with no extending and no oversize canastas
You can close a canasta and immediately start a new meld of the same rank (provided you have the 4+ cards of specific ranks to do so).
In your situation
Tactically, unless you needed the clean canasta, or the extant needs a single card to complete, they should have melded those 5's into the extant 5's.