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1. Congress recently passed a new law, which the President signed, that directs the President to cut in half all expenditures that Congress appropriates. Several groups that were promised federal money are suing and demanding the full amount promised. What is their best argument?

Would this fit into more of the line-item veto category because the President is editing the legislation, or is it more a Chadha scenario, where Congress is delegating another branch to do something and then approve or veto it?

Well I think it's more just a straight separation of powers issue, first, before reaching the line item veto analogy (which I think is what's more relevant; I don't see how it is very similar to chadha). Congress can't constrain executive authority. Also this law is seemingly preempted the next time congress makes an appropriation. This also possibly runs into the take care clause.