Yes, you can cross yourself with a sacramental like a Crucifix.
That is one of its purposes, besides being an object of our veneration.
Yes, it is normally done when starting (or ending) the Rosary.
As for the Rosary --
You can either meditate on the mysteries (picture the events, contemplate what you see, meditate on the virtues they are showing, etc.) or you can meditate on the words of the Hail Mary themselves. Humans can't actually think about two things at once, so you have to pick one :)
You can switch back and forth too -- basically, though, you don't want to fret about it too much. The devil wants to discourage you from praying the Rosary, since it's the surest weapon against his temptations and subtle tricks. If you discover your mind wandering, gently return to the meditation. As long as you're not WILLFULLY thinking about something else, it is not your fault. Our minds wander; we can't control them perfectly. Our imagination is part of our lower nature, which we can't control perfectly (ever since the Fall).
Matthew