I've been told that Meyer Lemons are pretty stable and should come true from seed, but it can take a long time (and a big tree) for them to produce that way. I've started a lot of citrus from seed (mainly for grafting and bud chipping) but I've only ever gotten fruit from my calamondin (calamansi) seedlings.
As far as what could be wrong with one, we really need to start with what part of the country you're in and whether it's in the ground, since there are so many things that can lead to defoliation. If something is really eating it, the pest will be local to your area. They are tough though, and can spring back from complete loss of foliage once the problem is remedied.
