Mechanism for hydroxyethylation on nucleobases (e.g. Thymine)
The second part of the question is easy to answer: the imide attacks at C3 of propylene carbonate instead of C1 (the carbonyl carbon) because carbonates are stabilized (double ester-resonance), whereas carboxylate is a so-so leaving group.  

The initial product from nuclephilic attack at C3 is a carbonate half-ester, which subsequently loses CO2 to form the observed N-hydroxyethyl imide.