To PAY for the bay view balcony room, and get included valet parking, is right now $359 for one night, $341 for the next. Also earns points.

To use POINTS for the room is 35,000 per night, Plus $75 cash upgrade p/n for a bay view balcony room, plus paying for valet parking at $45 per night. Will I earn points on those incremental charges?

I think you have made it complicated by factoring in the parking so I'll try to simplify.

Pay = $350 average.
Points = 35k points + $120 cash

I might suggest this creates a $230 cash difference. Using 35k points (if valued at about 1 cents per point) makes this a bad use of points in my opinion. If you value them at half a cent per point value then it's a good use. I have found getting 1 cent in value is generally easy to do so I would not use your points here.