Submarine Mystery Questions of the Week - 19 SEP 2014

Background
In April of 2001, then U.S. President George W. Bush decided to help Taiwan acquire 8 diesel electric submarines. There has been little [sic] progress on such sales mainly because the United States no longer produces conventionally powered subs.

Yet, thirteen years later ...
U.S. Navy official confirms discussion of submarine deal with Taiwan
Washington, Sept. 8 (CNA) A top U.S. Navy official said Monday that he has talked to Taiwan about its efforts to acquire submarines from the United States or build submarines on its own, but he declined to give details.

During a discussion on the Asia-Pacific rebalance held by the Carnegie Endowment for International Peace, U.S. Chief of Naval Operations Jonathan Greenert [former commander of USS Honolulu (SSN 718)] acknowledged having a conversation with Taiwanese officials but said he could not reveal any details.

Questions of the Week
1 - There is a very compelling reason that should have discouraged Taiwan from buying 8 US-made diesel subs; what is it?

2 - There is a also a compelling historical reason that should prevent even an Obama administration (with a lawyer in charge of our Navy) from signing onto to an FMS (foreign military sales) deal with Taiwan; what is that history?

The Bonus Questions
Many former submariners experienced the curious wonder of transiting through a canal in a sub. Juan Caruso says his experience doing so in an SSN was like taking a Rolls Royce through a hand-cranked car wash --- very tedious and time-consuming.  Unfortunately, a recent canal transit proved more hectic for one submarine.

3 - Identify the submarine by name. 

4 - Describe the known damage?

5 - Where was the sub towed for repairs?

Submarines are always silent and strange.