1) I know you are rewarded that card but let's say there are 2 players. Do you only get the Sheridon Medallion card? or does the other play get to draw something? (the app gave the medallion and I believe a random armor)
You only get the medallion, and choose who takes it.
2) Let's say later I banish the Medallion (which is type: item). Does the loot card get mixed into the rest of the item cards so if I have a card which says randomly draw X item cards, it has a chance to come back again? Or if you banish a loot card it's supposed to be removed from the game?
It is removed from the game. Note that loot cards don't have a check to acquire, so you can't put them as random cards in the item deck.