1) Try and bear down with your abs/ribs when you take your breath so your back stays flat (you are arching it here).
2) Aim for just below parallel instead of ass to grass - as you note this will be more comfortable on the knees.
3) Monitor the shoulder pain and make sure it doesn't increase over time. You may want to cycle in some low bar stretches after your sessions to get some more flexibility more quickly.
4) Popping and cracking could result from a variety of causes and doesn't necessarily indicate a problem.