Why do you have it set up that way to begin with? Could you put the content on the higher level page? Or is it meant to be an easy-to-remember "vanity" URL? In any case, yes, do not put a page with no content in your sitemap.

And to get it to stop showing up in search, you can add a canonical to the page, pointing to the deeper page with the actual content.

When I go to your site and search on USB flash drives, I see 53 products, same as in the Google snippet. What number did you expect to see? http://imgur.com/ZKZGvyb

[I know you obscured the domain in your image, but the name of the company is in the title.]

Also keep in mind that a few bad backlinks are not going to hurt you, especially in the context of a lot of good ones. Google knows that these come up.

From Google's Search Console (aka Webmaster Tools) help:

"In most cases, Google can assess which links to trust without additional guidance, so most normal or typical sites will not need to use this [disavow] tool."

And of course DMOZ, if you are talking old-school directory. And the keyword meta tag (not exactly a tool, but it got the job done).

The first one is more ambiguous. Is it fruit cake and bread of some type, or is it fruit cake and fruit bread [the ampersand generally being a joiner]?

If you do the searches, you will see they are all somewhat similar, with the second two being obviously more related. [collinstreet.com is going to wonder about the strange impressions data in their Adwords campaign...]

An ampersand and the word "and" are mostly the same in Google & there are some who feel that a special character in a title can attract more attention & so is a good thing.

Yes, I agree with those responses. The other thing to consider is that H1 tags should be specifically descriptive of the page that they are on. If you have the same H1 on every page (company name) you are not giving search engines any extra clues to what the page is about. (Also H2 and below can be useful in structuring your page, but are not big ranking signals.)

You can try using Google Adwords Keyword Planner to help you with this. [Keyword Planner > Find New Keywords > Search for new keywords using a phrase, website or category]

Click on that, fill out the form using (for example) "selling cars" for your product or service and drilling down to cars and trucks for product category [you can skip the landing page part] and you will get a lovely list, by relevance, of Ad groups each of which contains closely related keywords. See which ones seem appropriate to you--refine your seed term as needed and repeat.

[You need to have an Adwords account for this, but there is no cost to set one up.]