1] No, you don't need a DVD burner but it helps.
2] Whatever plays in your XBox. Almost everyone has different results.
3] You'll need a network card in your PC and an Ethernet Crossover Cable to communicate with your XBox.
4] Can't help too much. But if you're trying to burn mor ethan 650-700MB onto a CD, you won't be able to. It's probably a DVD image.
:d: