Q1) As explain in the user manual it is recommended to use another table prefix than jos_ for the master website
Q4) You have not mentioned that you have to setup IIS to define the virtual disk site1
Q7) WRONG
You can not use {site_dir} for the image and media.
Read the manual or the yellow light and you will see that you have to provide a relative path {rel_site_dir}
Values are :
- {rel_site_dir}/images
- {rel_site_dir}/images/stories
For the template, this may be correct
As already mentioned, this may not work on Windows platform depending on the template implementation.

Q8) This is the place where JMS save the slave site definition.

I am connected on your server and I receive correctly 2 different administration - the title is not the same