Stamping Rejected in Matamoros-- back to hyderbad for Visa

[hydstamping]

I am looking for some guidance from all the experts as this seems to be strange case that happened to me:

I went for my Visa stamping(E-V-C) in Matamoros, Mexico and Visa Officer mentioned that there are some complaints filed against my employer in DOL and asked me to go back to India for Visa Stamping.

I took a temporary visa(B2) and entered into US for a period of 15 days. As there are minimal chances of getting visa through my employer, I came back to India and applied a new h1b through Prime Vendor and my H1b got approved under Consular Processing. Meanwhile, My client agreed me to work from India.

Here are few questions that i need to guidance from you:

1. Is it legal to work from india for a US client and getting paid in $$?

2. If Visa Officer asks me, whether i am working for the client from India, what should i answer?

3. if he asked me to show pay stubs with new Vendor, would this be any issue as my paystub is running under US address, where i was living?

if there are any other things that i need to take care of, please let me know

Thanks!!