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It sounds like the tree has cankers. There are several it could be but hypoxylon canker is the most common. This article will explain more: http://txforestservice.tamu.edu/main/popup.aspx?id=1262

You need plants that will grow in dry shade, and there are many. This article will help: https://www.gardeningknowhow.com/special/xeriscape/xeriscape-shade-plants-plants-for-dry-shade.htm

Most of the time, these hollows are not a problem. The center part of the tree is dead anyway, so it is not affecting the health of the tree. To be honest, it is probably a home to an animal. Keep an eye on it, though. As long as it stays dry, there is no problem, but if you see rot set in, which will be damp wood that crumbles easily, you will want to have an arborist treat it to save the tree.

It will be a good place for a garden. The decomposing wood will help the plants. I would have the soil tested though, just in case. Sometimes the decomposition process can deplete the soil of nitrogen or make it acidic. As far as the larger chunks, as long as they are not interfering with your planting, you do not need to remove them.

You may want to seek the advice of an arborist who specializes in these trees. A few branches falling now and then should not be a concern, but this does not sound normal. It could be suffering from a disease of some sort.

This article should help: https://www.gardeningknowhow.com/ornamental/trees/tgen/repairing-tree-bark-damage.htm