There can be only one cart-wide discount (configured for All Cart Items) applied to a cart at a time, so if an automatic no-code discount for All Cart Items is applied to the buyer's order (which is shown in the cart as "current promotion"), and then they enter a code for another All Cart Items discount, that will override the automatic discount.
Each item in the cart can have its own, product-specific discount applied in addition to any cart-wide discount, so you might consider that as an alternative to the discount code you're using. You can even create a series of item-specific discounts that all use the same discount code, so when the buyer enters that code, that will apply to all items in the cart which have a matching discount code defined. This help page explains more about our discount settings:
http://www.e-junkie.com/ej/help.discounts.htm
To edit quantity, each product must have its "Let buyer edit quantity" setting enabled. If you also have Inventory Control enabled for any product, buyers will be unable to edit their order quantity any higher than your current available stock for that item. E.g., if your current stock is 1 for a product with Inventory Control, buyers can enter whatever they want for that item's quantity in their cart, but they will find their cart updates to show only qty=1 for that item.
