You can connect with the VPN client of your choice.
Yes, you can use the Windows VPN Client with a PPTP tunnel.
Yes, the router authenticates the user based on the credentials you provide.
Yes, the remote user will have a routed path to your LAN, this will allow him to use any non-broadcast service. This should allow all common applications, the primary exception being NetBIOS name resolution, which requires broadcast traffic.
No, you will not need a server on the LAN.