What is the correct water to pasta ratio?
This question was answered to some extent in another Pasta cooking question by Roux. This answer, which is basically just a link to a series of experiments by an MIT grad / Chef, dispels a number of myths about cooking pasta. For instance:


Water will return to a boil in the same amount of time regardless of how much is in the pot prior to pasta being added.  
Pasta won't get sticky with smaller amounts of water. It only gets sticky because of reactions in the first few minutes of cooking, and the solution is to stir it. This is necessary even with lots of water. 
You do not need a lot of water to cook pasta. 
Water does not need to be boiling to cook pasta. It simply needs to be above 180°F/82°C. 


Some really interesting stuff in the article that debunks quite a lot of kitchen lore about cooking pasta. I have tried this at home with great success. 

So in answer to your specific question: 


No, you do not need a lot of water, it simply has to cover the pasta. 
The amount of salt is heavily dependent on the amount of pasta, the amount of water, and your own taste. You need to find a consistent way to cook pasta and then experiment.