Which of the following has the correct punctuation:
Where this agreement usually ends, however, is on the question of, "does this Act go far enough?"
Where this agreement usually ends, however, is on the question of, "does this Act go far enough?".
Also, does Act need to be capitalized as used here?
The first punctuation is correct. As for the capitalization of "Act", it depends on what "act" you're referring to. If you are referring to a specific legislative Act, you capitalize. If you are using "act" as in an action, or if you are referring to the act of a play, use lowercase.
To start off, as Affable Geek's comment said, there are differences between the quotation conventions of US and UK, as described on this link. You can see that this example:
I heard him yell, "Do you love me?".
is unwieldy, but acceptable in the UK convention. However, it is not the case with the US convention. These two links follow the US convention of quotation, and you can find more examples there, like this one:
Malcolm X had the courage to ask the younger generation of American blacks, "What did we do, who preceded you?"
I think all the references I offered agreed to avoid using double marks though, so while both sentences are acceptable depending on the convention, you'd best be using the first one. After all, even The Guardian would follow "the so-called American practice."
As for the capitalization of act, Nathan Bennett's answer already touches upon this subject.
