You got a great crossbow at a really good price there!
I use a "bag" target rated for 300fps and field points for target practice with my Phoenix. Not sure of the brand, but I'd say any of them rated for 300fps should be fine.
The red-dot should be fine for practice and hunting if you practice plenty and learn hold over/under at various ranges. As mentioned, sighted in @ 25 yards it should be good for a "dead-on" hold on deer to around 30 yards.