Pacino really didn't speak much Italian in the restaurant scene. It was Sollozzo doing all the talking, except for a few clumsy words here & there from Michael.

His asking Fabrizio to translate to Appolonia's father was out of courtesy, because he knew he could state his intentions better in English and Fabrizio being fluent in both languages was the perfect one to assist.

However, in that later scene in GFII, where he's talking with his mother, Michael seems to be doing pretty well with Italian, though he still appears to be reaching for words. Of mama spoke English...but I think FFC did this purposely to give the moment more of a 'family' feel to it. More like this was a lost man not really knowing what to do next.

As for the grocery scene, Genco is not really translating Fanucci's words, but filling Vito in on what's been going on (cracking down on the neighborhood, people aren't paying, etc.). Obviously Vito can understand Fanucci, because they later have at least two conversations. When Fanucci stops the car, and then when Vito meets him with the $$$ during the Feast.

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