1. The worms will respawn, unfortunately. If you want to avoid them, wait until they reach the wall and start turning the other way. When you don't see them any longer it will be safe to cross. It can be a bit hit and miss though, and you have to kill those hellhounds.
2. If you're talking about the quest you received from the castle, you will need to go down the stairs to the east of the captain you talked to. Go north and investigate the dig, then report back to the captain upstairs.