We have had the same problems regarding SVN conflicts at our organization. We gave up on composite projects in SVN and went to standard projects. Each person works on a subset of tests in their own soap project and then projects just live next to each other like "ProjectA_1", "ProjectA_2", "ProjectA_3", etc.
In regards to your first issue, when you are opening a composite project in soapUI, you open the folder containing the project. Not the settings.xml file. So if the project name is "MyCompProject", there should be a folder named "MyCompProject", containing sub-folders for each TestSuite. In soapUI's file menu, choose "Open Composite Project" and then select the folder named "MyCompProject".