Changes

No, it's quite screwed up there, and was during most of the beta also. V1.08 fixes the problems. You'll need to patch to at least v1.07 when you first get the Expansion to have Magic Find work at all.

No. Some time ago in Diablo II it was possible to get only Sets and Uniques with high enough Magic Find, but this has been fixed now. In addition the whole item dropping system is totally redone for the Expansion, and Hell monsters can drop normal items, socketed items, low quality items, etc. Not just superior or magic as in Diablo II pre v1.07.

=Best Places to Item Hunt=

While playing just anywhere will get you more nice drops, you want to concentrate on bosses and SuperUniques to really up your chances of Uniques/Sets/Rares. Levels with lots of random bosses are good, and places where they aren't are bad. The very popular (since they are so easy) Act Five areas the Bloody Foothills and Halls of Valor are easy even in your +MF gear (beware the one Evil Urn in the Halls of Valor), but are terrible for item finding, since there aren't any bosses there, other than Dac and Shenk in the Bloody Foothills.