The forces acting on the connector point are the forces of friction of the M blocks and the weight of m, but they are in different directions; how do they manage to cancel out?
Aside: If the string (?) joining the blocks really was horizontal the tension would be infinite so it must sag a bit. Assume it sags to an angle θ with the horizontal. Then look at the horizontal and vertical components. The vertical components adds to the normal force on the blocks. The horizontal force is opposed by friction etc.
Yes because the Tension in the string is T = mg/sin(θ) and sin(θ) approaches zero. Perhaps draw it with the string forming a V and work out all the forces.