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It depends, what you are using it for. Is it a customer who does not want to pay for a custom design or is it for your own purposes. I would never use a template for my own purposes to me being unique means more than time saved.

Yeah it depends on your host sometimes but whereever the page that is loading is located you need to replace it with your index file. Generally it is in the root directory or some cases an HTDOCS folder, but in your case it should be the folder you posted the contents of

What Denno said is prob your best bet that is alot of information to put into a forum with no back and forth communication. Your best bet is to look at template structure or hire someone to do it for you

you dont have to go to a local comapny anyone can do it from anywhere and here comes the shameless self plug could always contact the folks at Mythic Tech lol http://www.mythictech.ca