ok, now we've got you kinda sorted with the mechanics of the bike, we need to sort you with the fit of the bike.
your seat should be roughly level. mine points up ever so slightly as this tips me back onto my sit bones.
now put your heel on the pedal, line the crank up with the seat tube and set the seat hight so that you have no bend in your leg. this means that when you pedal with the ball of your foot (the most effective area) you should have a slight kink in your leg.
lastly when the pedals are level you should move your seat forwards and backwards so that your knee is above the pedal.
that's the best place to start, minor alterations from that should give you a comfy and productive ride position.
Depends completly on what you want, have a look on pinkbike.com in the for sale bit, can get second hand good wheels. For a wheel like I use looking at £100 + but I use downhill wheels for strength. You need to look at cross country wheels