(1) Is there something wrong with the display on the camera? You photo looks a little too sharp for a hand-held shot at 1/10th of a second (but you could have got lucky). What does the exif data show?
(2)Shooting in program mode, the Auto ISO will only go up from 200 if the there are no more available sutter speeds or apeture settings to properly expose the photo. If you use Shutter priority and set it to 1/500th or something, you should see the ISO go up pretty quickly as the light reduces (eg turn the lights off indoors...). Actually, if you switch to manual exposure, the ISO will vary as the light changes so as to properly expose the photo.