1. Nope. You understood the first half correctly, but "go to seed" means something different than you would expect. It means "become worthless." Lots of edible plants, like celery, broccoli, and asparagus, are only good before they start producing seeds. After they start making seeds, they become hard, and either tasteless or bitter. You can't eat them anymore. If someone has "gone to seed," they used to be good, creative, inventive people, but now the only new ideas they have are bad.
So, Cervantes became better as he grew older, but people who "go to seed" become worse.
2. No. Here, "on" is a typo. It should be "learning AND growing"--two separate activities.