1. When in the target body, does the caster retain their ability to cast spells? (The description refers to keeping "your mental abilities" but is that sufficient to allow spells? And I'm not worried about material components, here.)
2. Could a Charmed individual serve as a willing target for Marionette Possession?
1. Spellcasting is just fine, provided of course the new form has the appendages needed to make verbal, material, and somatic components.
2. That depend on the individual. Being charmed, they are friendly towards you, and could surely be a willing target of certain spells.
In the case of Marionette Possession, allowing someone to take control of your body is something that require an extreme amount of trust.
So for some creatures, I'd rule it as: Make the Cha check to convince it.
For others, I'd rule it as: Obviously harmful, so it doesn't work (or break the spell).