A) You can use the 250 GB disk if you like. I would personally recommend buying all new disks, as a disk that's 2-3 years old is statistically more than halfway through it's lifespan.
B) You have no control over where Windows Home Server puts the data in your shares, or your backup database. All this data will be "in the storage pool". To back up the shares, you can use the server share backup tool (added last year in Power Pack 1) to back them up to an external drive. There is no supported way to back up the backup database, but the
Home Computer Backup and Restore technical brief contains steps to do so.
C) You will normally lose only the system partition. If the disk fails, obviously you also lose the data partition.
D) Yes. The minimum recommended is 512 MB, which is adequate for a basic Windows Home Server installation. If you install several add-ins or (unsupported) software through Remote Desktop, you will probably want more.
I'm not on the WHS team, I just post a lot. :)