1. No code enforcement and/or lack of knowledge by the installer.

2. Yes

3. You probably don't have to (there would be some questions about the 3 way conduit & switch), but in the long run it would be best.

I would also install a main breaker at the sub-panel

Ok i took the cover off the subpanel, and it is physically not designed for a main breaker. I have been told that this was sometimes done in apartment buildings at the time my father was a carpenter and was involved with a lot of 6+ story apartment buildings, so likely he bartered with an electrician for the materials and probably was told how to install it.

As for code enforcement, many electricians in the area have told me that city of Detroit inspectors miss the obvious and catch the mundane.

Since there is no provision for a main breaker, I guess I strart budgeting for a new subpanel (any ideas on a 10 or 12 circuit panel 40- or 50 amp main with at least one 30-40 amp 240 circuit)

You might try pulling the top two breakers on the right and left side to see if there is a tapped hole in the back of the box. Or look at the labels in the box to see if a pair of spaces is designated for a field installed main breaker. Some older boxes were made for field installed back-fed mains.

If the hole is there, you could purchase a 2 pole breaker to install in that spot & backfeed it so you would now have a main breaker. One additional step would be required and that would be installing a machine screw through the breaker and into the threaded hole. This is done so that the breaker cannot be unplugged just by pulling it out with your hand. Sylvania may have some other means of installing a main breaker such as a hold down clip.

appears to be main lug only?
finally took some pics
Also is it a violation that its installed upside down (guessing yes, just want confirmation)
Also I havent seen any breakers like this anywhere, think if I took one out and went to supply house they could give me more info?

Hmmm. If that's a subpanel I am questioning the neutral and ground bonding. I also see no reason why you can't backfeed by using the far right 2 slots as your main breaker. AFAIK, you can mount a panel in any orientation you want.

I also see no reason why you can't backfeed by using the far right 2 slots as your main breaker.
one row of breakers right down the center, the terminals or lugs (sorry dont know the correct name) are on the left

As long as all the breakers operate horizontally, there is no problem with an upside down box.

It's been years since I've seen one, but I believe that is a Zinsco panel. If thats the case, you might consider trashing the panel & buying something better. This brand is about on a par with Federal Pacific & they are usually detested by most electricians.

You might want to visit the following site to help you decide if you want to keep this panel.

Here is a link that might be useful: Zinsco breakers

thanks tom, I will replace that panel. That does shed some light on why sometimes the breakers didn't trip when they probably should have.

I think what I plan to do is leave the existing wiring and feeder breaker in the basement and put a new sub panel with a main breaker in the garage. I will try to find some way to install ground rods while I am at it.

Is there any problem using a 100 amp rated panel, even though I will only be feeding 50 amps (the biggest breaker in it will be 40 amp)?

That will be fine. The panel rating is a maximum, so long as you feed it with a breaker appropriate to the wire used for the feeder, you'll be fine.