It should be working... not sure why you're having trouble. Have you checked that the firewall on the main router isn't potentially blocking access from the OpenWrt dumb AP?
You could try resetting to defaults (make a backup first)... connect to the WAN port initially (this will create a double NAT, but it's okay for this test). OpenWrt's default LAN is 192.168.1.1/24 so it won't collide with your main router's network, and the WAN port is set to get an address via DHCP, so it should 'just work' -- see if the OpenWrt router can update the package lists successfully. You could always install any desired packages at this stage before configuring to the dumb AP mode. Then you can test again after it is configured as the dumb AP.
Meanwhile, what packages were you hoping to install? There are some useful packages for the dumb AP scenario, but often the device is literally just a wireless bridge and won't be running much in the way of non-default packages.
No (maybe yes, but there it gets complicated), for both questions actually.
The whole nature of a dumb AP is exactly that, being dumb, doing nothing than converting ethernet to WLAN and vice versa, that doesn't make adblocking or SQM impossible, but more cumbersome.
--
adblock:
Yes, it's possible - set up gateway and DNS servers on your AP correctly, configure and enable adblock. At this point adblock 'works', but nothing will use it… In order for this actually work, you have to either make your AP the authoritative DNS server for your existing router (usually not a good idea, you quickly end up in circular dependencies and hardcoded ISP DNS servers) or make your existing router hand out your APs IP as DNS server for your LAN (your existing router would need to support setting option 6 of the DHCP leases it's handing out). Both options are possible, in a careful network design either of these might work, but I wouldn't quite recommend them (unless you really know what you're doing and why).
SQM:
For SQM to do anything useful, it must be at the bottleneck between you and your ISP (there mustn't be any alternative routes around it (no devices connected directly to the existing router, all traffic would have to pass through the 'AP', which at this point wouldn't be a dumb AP annymore)), by the very nature of this, an AP is not there. Shaping WLAN traffic doesn't work, at all; WLAN throughput is highly volatile - both differing between multiple wireless clients and changing over time (from one packet aggregate to the next) and packet loss/ resends would mess this up even more. Yes, you can still configure SQM to do this, but the results would be… not good.
Neither of these services make sense on an AP, dumb or otherwise, although it's technically possible.
@slh beat me to the answer (with excellent followup info, too!).
That said, if you can make your primary router OpenWrt (maybe use the one you've currently got as the dumb AP, or consider flashing your main router to OpenWrt if it is supported), then it would make sense to try using adblock and sqm.