Yes InDesign CS5.5 will generate the both TOC's but as far as I know it will not place the HTML TOC into the toc.ncx.
Did you insert the guide reference to the HTML TOC into the content.opf file? when you test it on a Kindle are you able to pull up the HTML TOC from Menu>Go to..>Table of Contents? if so, you dont need to place the HTML TOC into the toc.ncx, the Kindle refers to the HTML TOC for your TOC (and not the toc.ncx) that should be referenced in the guide section of the content.opf.
After you checked “Break Document at Paraph Style:” in the ePub export window, did you also select the style you wanted to break it at?
It is possible to link images, I havent tried it in InDesign, I have hand coded HTML links around images after my ePub was exported from InDesign. check out some of the resources from the eBook Architects website.
If you dont already have them, I would pick up a copy of Kindle Formatting by Joshua Tallent and also Epub: Straight to the Point by Elizabeth Castro