Karbon A9+ System space and Internal Storage

Question

1. I have recently moved from iPhone 3G(3 years) to Karbon A9+(ICS). While my mobile is showing GBs of space available, I frequently get Low System space warning. I had then added a 8 GB external SD card but to no avail. Coming from an iPhone background, this was confusing....if I have tonnes of space why am I getting such notifications?
2. On System Setting under Storage,its displays "Total space 581 MB" out of which 89 MB is available. Internal Storage is 2.57 GB out which 2.56 GB is available. While on other mobiles of other brands, I dont see the distinction between System space and Internal Storage. Which this discrepancies and what are the consequences?
3. I have rooted my device...Is there some method where I can increase my system space to include the Internal Storage which is lying almost completely un-utilized?