1. Units may take ground only if the basic rules allow it, so only this unit, which battles a successful melee.
Scenario specific: The unit, which want take ground, may not break/leave the formation voluntary with this additional movement. So the unit may only take ground here, if it´s still in formation after that move.
2. Only one unit may short supplied. If MacDonalds own unit is short supplied, then the formation of the other units is broken, until MacDonald (and/or his unit) move again into formation.
And the complete MacDonald rule is indeed a unlucky one, makes to much troubles
Superman wrote: 2) If Macdonald’s unit is short supplied is the entire formation also short supplied? If only Macdonald’s unit is sent back to the base line then I take it the formation no longer exists.
I concur with Bayernkini's post, with this addition;
MacDonald's square relies upon the existence of MacDonald, so if McDonald (and attached unit) are short supplied, then for the purposes of considering his Square, it is calculated from MacDonald's location.
So in this instance, if MacDonald moved to the base line, all other units might be detached, but other adjacent LN might join the new square. So the square still 'exists' as long as MacDonald does, even though it may have 0 units.
Glory is fleeting, but obscurity is forever.