1.That's the way I installed. It probably doesn't matter, but I've seen some computers screw things up if you don't install the drivers before plugging things in.
2.It'll affect other games, if you have previously configured them to use the gamepad using the Microsoft drivers.
3. The XBCD driver applet doesn't have the ability to do this (that I know of). You probably need another application to configure that and I don't know the name of it offhand.