If you are burning your rice on method 1 you either have too little water in it, cooked it too long, or have it on too high a heat. Assuming you are using white rice the general rule of thumb is to use double the volume of water as you do rice, so 2 cups of water for 1 cup rice. You then cover and bring it to a boil and then turn it down as low as you can and cook it until the water is absorbed, this could be 10-18 minutes depending on the variety of rice you are using. I sometimes bring it to a boil on a big burner and move it to a small burner to finish. I use method 1 for all white and brown rice as once you get the technique down it's pretty much foolproof, and less muss and fuss than method 2.
If your rice is soggy with method 2 you have cooked it too long, plain and simple. All you need to do is cut down your cooking time. I use method 2 for wild rice as every variety needs different amounts of water and the packaging is usually completely wrong. Using more water than can be absorbed takes the guesswork out of it and makes cooking it more reliable.
As for the starch part of the question rinsing your rice to get more separated grains does remove some of the starch from the surface of the rice. As starch = carbs = energy this does mean you are reducing the amount of absorbable energy from the end product. However, this is vanishingly small and nothing to worry about, it's all personal choice of how you like your rice.