OMG - 3 calls into II, 3 different reps, 3 different stories. I write this not for answer to question - but just info for future people looking into this.
My question to II: If I want same week at same resort or one close by does it need to be on a grid location? Because this "When you have an upcoming confirmed exchange, you can reserve a second unit for the same week at the same resort or at one nearby, and vacation with family or friends." does not indicate anything about a grid.
Answers
1. Yes, needs to be on the grid.
2. No, as long as your original exchange is for a lower size than your deposit. (example: used a 1BR to book a studio - can get another studio at the same resort)
3. Yes, needs to be on the grid
I questioned #3 further about what #2 told me about second exchange off of deposit. She said not based on unit size, but capacity. My deposit had capacity of 6. My exchange has capacity of 5 - so could not get another. But, If my exchange had a capacity of 4, then I could get another exchange into same resort for something with capacity of 2.
Appears XYZ Type 2 is still available - I had forgot all about that option!