The first problem can be solved by changing the query_posts in your work section. Replace '&category_name=work' with '&category_name=work&paged=1&posts_per_page=-1'
For the second problem, why not use the category template itself in place of index.php?
As a side note, you should not use query_posts for this use case. In place of that you should use a new WP_Query object for the work loop & pre_get_posts filter for the main loop
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