Tank frosting would be a visual appearance I would think on the outside of the tank. It's an indication that the pressure in the tank is getting low resulting in colder liquid. As the liquid gets colder, it can cause frosting on the outside of the tank.
Continuous would, in my opinion, be LP requirement for more than a short period of time. For a few minutes, you could pull quite a higher rate from the tank but for longer periods, you'd want to use the lower rating (if the LP load was lasted for 1/2 an hour, I'd say that was a 'continuous' load).
The problem is that you are not gaining enough ambient heat to vaporize the LP gas so you can draw it off. 1.2 MMBTU/hr works about to about 60 lbs/hr. To vaporize that, you'd need about 3.2 kW of heat entering your tank(s). You could try putting heat tape on the bottom part of the tank with an inch of insulation and using that heat to vaporize the LP you need. It's a fair chunk of heat tape I realize since this stuff is usually rated for a few watts per foot but you can get higher outputs. One thing is you want to make sure you have a relief valve on the tanks (I'm pretty sure you do and this isn't enough heat to overload them).
For telling the level in the tank, I've heard of a tape you put on your barbeque tank. When you pour hot water on it, the portion on the metal above the liquid warms up more than the metal below the liquid level and you got a colour change. You could check with your LP supplier for more information.