Hi Dean,

1. If the straight edge shows a gaps at the ends of the neck (ie that neck is convex) you want to adjust the truss rod in the MORE direction of the diagram (to produce more forward bow).
2. The neck does not need to be on the body.
3. I have heard this "no more than 1/4 turn" rule before (I assume for any neck) as it gives time for the wood to adjust (reducing the chance of cracking the wood on the neck or fretboard).
4. Yes - a flat as possible fretboard and then level the frets.

Hopefully others will agree with this.