EDIT: Apple fixed, once again, the wrong bug. Their change rendered my workaround useless. It just doesn't work anymore, you can't add files to the Settings.bundle.
Please refer to the answer of Javi for a method that seems to work.
I hope you like ugly workarounds.
- Right click on the settings bundle in the side bar.
- Select
New File
- Pick Resource / Strings file
- Name it Root.strings, make sure it is placed inside settings.bundle
- In the side bar the file will be visible twice. In the "root" section, and in the Settings.bundle. But both point to the same files.
- Select the Root.strings file in the root section. (AFAIR you have to convert it to UTF16)
- Add localization, xcode will ask you if you want to replace the file. Yes, you want this.
- Add as much localizations as you want. You should be able to edit the file in the root section of the sidebar.
I hope this works for you, for me it does.
And if you haven't done it please report the bug at bugreport.apple.com
I'll install the new release now, let's see if this is fixed. Edit: Not fixed.
EDIT: I don't know If I understood your second question correctly. But when you add a localization to the file that appears outside of the bundle it adds a localization folder to the settings.bundle
After adding spanish localization to Root.strings
:

The actual file is in the foo.lproj folder, it just doesn't show them in the xcode sidebar. If you check the location in the file system you'll see they are inside the settings bundle.

Yesterday I checked with a english and german file and it worked correctly in the simulator. I guess it's just a wrong sidebar layout. The underlying locations and the handling of the files seems correct.