Dr. Crusher scans Riker's forehead and tells him that there is damage to the parietal lobe. The parietal lobe is at the back of the brain/head.
Data uses a contraction in the first scene on three different occasions - something he normally doesn't do. However, he is reading lines from a play. It's not part of his normal speech pattern, just him "mimicking" another character, which is something he has done before.
Obvious matte work when the different layers of reality break apart.
It is never explained why Riker has been chosen to go on that undercover mission. He is not known for expertise in that kind of job, nor does he seem too familiar with the environment and the circumstances on the planet (which is why he has to be briefed about those things first). A more logical choice, for instance, would have been Worf - who appeared a lot more knowledgeable about Tilonian culture and the planet's terrain anyway - or any other specially trained security officer. Of course, the actual reason for Riker's use on this mission is to set up the story.
Data tells Riker that he gave a very realistic performance of "multi-infarct dementia." But his character's behaviour has more in common with schizophrenia.