We shall deal only with the Passwords aspect of your question
Your two issues are best handled separately.
When you select an account under Passwords > Security and click Change Password, Passwords takes you to the website or app where you change the actual account password.
Apple’s instructions specifically say to change the password on the website or in the app.
Afterward, return to Passwords > All and check the saved entry. If the new password is not present, select Edit and update the saved password manually. (support.apple.com)
For websites or apps that no longer exist, you can remove their saved credentials from Passwords.
Deleting a saved credential does not delete the account itself from the former website or service. Deleted passwords are retained in Passwords > Deleted for 30 days. (support.apple.com)
The change from approximately 350 to 290 and then back to 350 should not, by itself, be taken as evidence that the deleted passwords have returned.
Passwords identifies different security issues, including compromised, reused, and weak passwords, so the Security total reflects the recommendations currently identified by Passwords. (support.apple.com)
To determine what happened, check several of the obsolete accounts you deleted and see whether they actually appear again under Passwords > All.
If they do, check Passwords > Deleted and verify Passwords and Keychain under System Settings > [your name] > iCloud.
Apple states that iCloud Keychain keeps passwords and passkeys synchronized across approved Apple devices. (support.apple.com)
Also keep the three Security categories in mind when working through the list. A compromised password indicates that Apple has identified it as appearing in a known data leak; a reused password is one used for more than one account; and a weak password is one that is easily guessed. These findings can require different actions. (support.apple.com)
I would work through a small number of accounts first rather than making hundreds of changes at once.
For each account, change the password on the website or app, verify the resulting entry in Passwords > All, and then move to the next account. For obsolete accounts, remove the saved credential and later check whether the individual entry actually returns.
