Answer for Question 3.
In the MP configuration, go to the Movies section and select sub menu folders. In there you can add multiple shares(drives). If you have one checked (has a tick against it) this will be the default share to be shown when you select the share view. If you have no check boxes selected, when you go to the shares view, it will show all the shares configured. Some extra info can be found in the Docs
MediaPortalSetup Movies - MediaPortal Wiki Documentation
Now answer for question 1,
Once you have your shares setup, you can run a scan of your shares. This can be done from MP confugration under Movies/Movie database/ Scan Tab. You just need to select all the shares you want to scan. Another way also is from within MP itself, from the shares view, find the individual movie to be added to the database and press F3 on the keyboard or right click and select IMDB. Note internet connectivity is required for this. This will add the movies to the database. Once all your movies are added to the database, clicking any of the other views (genre, Title, Actor, Year,etc)will display the Coverart of the movies. Then you can click on it to start playing the movie. Note, the database allows movies from different shares to be compiled into one big list and the user (ie. kids/wife/non PC people)do not need to navigate through shares and folders.
Question 2 - Can't help you there. Will be interested to see how you go with that as I am in the same dillema. I am looking at DIVX6 or XVID(opensource).