The crew did indeed know they had lost the ram; the Virginia's ram actually became stuck in the Cumberland and the weight of the sinking ship nearly dragged the Virginia's bow under with it before the ram broke off. In retrospect the ram was merely an afterthought and, given the substandard engines on the Virginia, should have been omitted; it lacked the speed to make effective use of a ram.
Rebuilding it as a casemate ironclad rather than a broadside ironclad was certainly the correct choice; the angled armor used less iron and offered better protection than a similarly sized broadside design (over the course of two days the Virginia was hit numerous times without a single penetration). The number of cannon mounted was better suited to the size of the ship and mounting more would have increased the already deep draft, lowered the freeboard, and increased the strain on the engines, all of which would have unduly restricted the area in which she could operate.
EDIT: Regarding the ammunition, the Virginia carried both shell and solid shot; the latter, heated in a furnace, were used to destroy the Congress. The latter were also used against the Monitor, with very little effect; only the shot which struck the pilot house and wounded Captain Worden had any real effect. The turret was too heavily armored to penetrate, any shot which struck the deck would come in at a very shallow angle and simple bounce off, and the hull, being completely under water, was effectively impenetrable.