The line-up is indeed very good this year. I think the concerts start around 2-2.30 pm so you might miss the first 1 or 2 acts of the day.
About the Way Out West vs Slottsskogen venue I think it means the same place since "Slottsskogen" is the actual festival location.
Yes, unless the interrailing is also going to include camping I'd recommend something much smaller (50L max, but the smaller you go, the smugger you'll be 😂). But might be pushing it to get the ideal bag for fests and the ideal bag for travel for £100 so will have to compromise somewhere.
Osprey tend to be good quality, but can be a bit pricey.