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Sai Prasad
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Hi Drew, I don’t get your first question on remaining duration updated due to allocation for resources. Are you replacing resource for a in-progress task? It would be good if you send a screenshot.

The second problem might be you have configured your resource (which is a role in your plan) is available only 100% to the Project. Go to Resource Sheet view (In Project 2007 or earlier, click View menu otherwise click View tab), and double click the resource and change the units in Resource Availability table to 200% – see this screeshot http://i.imgur.com/sZEZXcO.png; this means you have two individuals on that role working for 100% on that task.

Now, switch your view to Gantt Chart. Assign the resource to the task with assignment units as 200%. This will ensure 16 hours is not flagged as over allocation. http://i.imgur.com/uGUOdft.png