1.)When an object floats, is the volume of the object submerged and displaced water equal?
Yes, the submerged volume of the object equals the volume of the water displaced.
V(object)p(density of the object)g=Buoyant force=V(displaced
liquid)p(density of the liquid)g
$$V_{o}ρ_{o}g=V_{l}ρ_{l}g$$
This equation applies if the object floats (is in equilibrium) regardless of how much of the object is submerged.
The left side of the equation is the total weight of the object. $V_o$ is the total volume of the object, not necessarily the submerged volume of the object.
The right side of the equation is the buoyant force. $V_l$ is the volume of fluid displaced by the submerged volume of the object.
2.)So if volume displaced become equal to volume of object, According to the formula, volume and gravity get cancelled on both sides leaving
densities equal. This is not possible because if the density of object
is less it floats.
The density of the object does not have to be less than the density of the fluid in order to float. It has to be less than or equal to the density of the fluid. If it is less than the fluid density, the object will float partially submerged. If it is equal to the fluid density, it will float completely submerged, meaning $V_o$ = $V_l$.
Hope this helps.