I am a bit confused by how the position of the ca'o changes its scope and effect. Does ".i la .erik. pu farlu ri'a lo bolci be lo rokci vau ca lo nu ra ca'o klama" mean that only the going is continuous?
It means that Eric falls at a time when the going is going on (i.e. afer it started and before it is finished). "ca'o" indicates that the event is in the midst of happening (already started and not yet finished), not so much that it is continuous.
Also, is the use of vau correct and necessary here?
No, "vau" terminates the bridi, so you can't add a new term "ca lo nu ra ca'o klama" after it.