First, let me say for the sake of others reading this that the presence of older-standard 802.11 gear never causes a newer-standard 802.11 network to fall all the way back to the older-standard rates. That's an old myth that has never been true.
There are two main ways that the presence of older-standard 802.11 gear slows down newer-standard networks:
Because the older gear can only use slower signaling rates, it takes a lot longer (a lot more airtime) for the older gear to send or receive a given packet than it would take modern gear. Imagine being in a panel discussion with one guy who TalksReallyFast and another guy who S - p - e - a - k - s - R - e - a - l - l - y - S - l - o - w - l - y. Every time it's the slow-talker's turn to answer a question, he wastes a lot of the panel's allotted time with his slow talking. The fast talkers don't get as much time as they would have had without slow talker present, so the overall amount of words said during the panel discussion is a lot fewer.
Because older gear doesn't know the more modern modulation schemes, it can't detect the transmissions of the more modern equipment very well. So the modern gear has to enter "protection" mode that helps the slower gear know when the modern gear is going to be transmitting. Those legacy-protection modes slow things down some, but not drastically.
Some people make the rookie mistake of thinking they can solve #1 by refusing to let older gear on their networks, and they think that means they can solve #2 but disabling the legacy protection modes. But what they don't realize is that legacy devices on another network on the same channel or an overlapping channel will still cause both the #1 and #2 problems, and the the only thing worse than having to use legacy-protection mode is when you need it but don't use it. That allows the legacy devices to step on the modern devices transmissions all the time, which can crater performance.
So, to answer your questions:
- Yes, the presence of an 802.11b device on an overlapping channel can cause the other network to slow down some. It's hard to predict exactly how much.
- In general, having if your neighboring 802.11 network can't be on a completely non-overlapping channel, it's best to have it on the exact same channel as you, not a partially-overlapping one. When 802.11 devices are on the exact same channel, they do the best job of yielding to each other nicely. When they're on partially-overlapping channels, they have a harder time seeing each others transmissions reliably, and are more likely to stomp on each others transmissions (by that I mean transmit at the same time; collide).
- Nope, configuring for N-only doesn't solve anything in this scenario.