I have two rules to ask about.

First, if your ball cannot be found but you think somebody has picked it up (stolen it) what is the rule there? I was on a pitch n putt the other day and hooked a ball onto the next fairway (the fairways don't have anything seperating them other than about a yard of rough on some). There were two kids down that fairway and where my ball went was out of our sight as it was over a hill. When I got down there I couldn't find my ball but was pretty certain that the two boys had picked it up but had finished that hole and gone to the next which was out of shouting distance. Being a beginner and not knowing much of the rules me and my friend decided I should take a penalty drop near where we think the ball would have been.

Second, what is the rule when your lie is so bad you'd rather take a drop? I presume it's a one shot penalty but where can you drop the ball?