Yes, it may create problems. It is advisable to get them fixed.
2.Not all universities treat that as it is not necessarily a standard. What universities would consider is just M as it can be considered initial.
You need to change the documents to your real name, I mean to say to your real correct name and spelling. If you can, you should fix the education documents. It can be tricky as well during visa stamping when you have these differences. One option is to have a name reference sheet for Study in US