No, it’s not lossy. It “streams” a PCM 44.1 or 48k uncompressed signal via USB to your computer, which treats the turntable as a sound device, and then you capture it in real time in software like Audacity, Adobe Audition, etc. What you then do with the file is up to you. If you want to keep it as FLAC, WAV, or something else is up to you.
Not sure what you mean by point 2. If the USB connection is loose in your computer try another port or adapter?