Re: magento "there has been an error processing your request"
First of all, this forum isn't a support channel -- it's just user-to-user, and getting answers to your questions generally means having somebody drop by who happens to know a bit about what you're using (or trying to do with it). I don't typically look at Magento questions since I neither have nor want any experience with Magento. If you have a support issue, use the support system (file a ticket) and it will get some attention.
You can use your two MySQL databases to serve multiple applications by using table prefixes (usually an option in third-party software). You don't reduce activity by spreading it out over multiple databases; it just makes consolidation, replication and backup of individual applications (or application suites) easier, and it can help with database speed if you have a lot of data to work with.
Accessing outside servers in your server-side code is restricted. I don't know if that includes external SQL calls; I'm not an admin here, and I've never had a good reason to try it myself. But it does cut down on proxies and auto-content "SEO farm" applications. Proxies use server resources, blocking sites hosted on x10Hosting without actually using the hosting offered here, and content farms ruin the web for everybody by making search engines useless.
You need to keep in mind that the restrictions that have been put in place are there because other people have abused the system severely before you got here, and there are scads of people who sign up every day only to have their accounts immediately and permanently suspended for trying the same things. It's something you almost have to expect with a free service, even if you'd like to think better of human nature.
“Beware of bugs in the above code; I have only proved it correct, not tried it.” --Donald Knuth
"It was as if its architects were given a perfectly good hammer and gleefully replied, 'neat! With this hammer, we can build a tool that can pound in nails.'" -- Alex Papadimoulis (on TheDailyWTF.com)