Hi Jay,
1. Please use Site Logo option to upload your logo. Site Header is not the right choice for the logos. When you will use Site Logo option, Logo will remain responsive and will be clickable as well.
2. Site header can be used to beautify your blog header. Site header will display as a background of blog header. You can use any good image as a site header to enhance the visual look. It will be responsive as well but will be clipped at lower screens like mobiles etc
3. Which menu you are referring as a Middle Menu bar. If you are referring the menu just under the logo. It is the main navigation. Please confirm so i will share a CSS Snippet with you that will hide this menu.
Thanks