My issue here is that everything is in 16-bit format. I'm not succeeding in finding a way to reduce to one-bit format.
First thing is to check out Appendix A
section 5.3. Look at the example and note how you can have more than one "out=" connection on a part. (It's like soldering more than one wire to a physical output pin.)
Armed with that info you'll be adding more "out="s to to your 'no' handling Mux16.
What bit of 'out' indicates that a number is negative? 'ng' is just an out= connection.
For 'zr' think about what makes a binary number non-zero. What part that you made in project 1 that you haven't used yet might be useful to determine if half a 16-bit number is non-zero?