1. That is not a boiler, its an direct, unvented, hot water cylinder.
2. As others above have stated, both thermostats should be set at 60. If they have numbers 1 to 5 instead of degree markings, 4 will be around 60.
3. As others have also stated, the lower immersion heater is for the overnight rate (if you have a dual rate meter) and the upper only needs to be switched on if you run out of hot water during the day.
3. Those cylinders require an annual service for safety.
4. I don't like the look of the cable to the upper immersion heater. Both it, and the casing of the cylinder immediately above it appear to be heat marked. It might be that the electrical connections inside the immersion cap are not fully tight and are arcing. However, it might just be heat rising and taking dust with it. The cable shouldn't be wound round the cap like that.
5. That bag of whatever is obscuring the tun dish, which is part of the safety devices for the cylinder. It shouldn't be there.