1. you can run it with one drive.
2. You indeed must use EXT2/EXT3, this is a Linux based box. There is no issue of file format when accessing the files from Windows, the file system is transparent over the network.
3. Yes, upgrade to 1.03 before you do anything with the box.
4. You should be able to do this, but be aware people have had issues and lost all the data on the first drive in the process. Remember, RAID is NOT backup, you need to have a backup of your files anyway.