This is weird, but none of my bombs seem to be damaging any of the monsters or the Scoiatel. Not to mention the fact that when I run into traps, they don't seem to be damaging me either!

Mhm, the bombs should definitely do some damage (I use them all the time), but as for the traps - are you in chapter 1 and running into these bear trap thingies (snares) all the time? Cause these never did any damage to my Geralt either, I always assumed that the armor just absorbs all damage (IIRC you even get a little prompt every time that confirms this) - it is quite funny since they do seem to inflict heavy damage on Geralt's opponents.
So, what kind of bombs are you using? I think Grapeshot is the only one that deals significant amount of damage (unless you invested in alchemist tree), the others I mostly use for the effects (which may not do a lot depending on enemy type, I guess?)
Just my two cents, really ;)

I figured out that the last bomb in your inventory deals no damage. It's a bug one or two people seems to have run into, but I couldn't find any substantial evidence of it on the internet. If my inventory has more than one bomb, the bombs do normal damage.

Ah, interesting. Never noticed that, but maybe I simply haven't encountered that bug... do the other effects still work (fire/poison etc.) with the last bomb?

I'm not sure. Are daggers use and throw, though? I mean, can you retrieve daggers after you have used them?

Nope, one time use only, so you need to buy or craft new ones once you used them up.
I never really bothered with daggers, mind you. Some seem to like it, but I prefer bombs ;)