For the first question, do you mean that he wants to take the content of xyz.com and make that a subfolder of 123.com, or something else?

For the second question, if you are using a verification file you must put the file in the root folder. You must also configure your web site to return a header code of 404 if a page does not exist, which apparently the site in question is not doing. Generally, this is something your hosting company should be able to help you correct.

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