Can you tie up these Laurent sequences?

Suppose we know that $y_j=x_j^2$ for $j=n-1, \ldots, n-k$. Then $$x_n^2=\left(\frac{x_{n-1}^2+x_{n-2}^2+\cdots+x_{n-k+1}^2}{x_{n-k}} \right)^2=\frac{(y_{n-1}+y_{n-2}+\cdots+y_{n-k+1})^2}{y_{n-k}} =y_n.$$

If all $y_n$ are integers then from requrrent relation follows that they are squares. It means that all $x_n$ are also integers. So $\{y_n\}$ are integers iff $\{x_n\}$ are integers.

Integrality of $\{x_n\}$ is a special case of more general result (see case (1) in Theorem 3.9 from the article Laurent Phenomenon Sequences by Joshua Alman, Cesar Cuenca and Jiaoyang Huang).

As to Question 2, the sequence $(x_n^2)$ solves the same recursive relation as $(y_n)$, with the same initial values, therefore they coincide.