That's alot of questions. I'd suggest visiting the dis boards and lurking the existing threads since your trip is so close.
http://www.disboards.com/forumdisplay.php?s=&forumid=30
1. Machines are located near the ride you want an express pass for.
2. It's free.
3. You can get 1 ticket at a time. Hotel guests get unlimited express passes and don't have to wait at the machines. They just flash their magic key and go into the express line.
4. You get to pick from two times from a touch screen kiosk.
5. Yes, the machines for the popular rides run out of tickets at noon.
6. No, once you get the tickets, the express line is 20 minutes or less, usually a walkon.
7. Yes, it's worth it. But you'll only be using it once or twice during your day. It's definately worth it to stay on site during peak times, but those hotels cost alot of money.
Best advice is like Melissa said. Get to the park half an hour before the gate opens. Then run to Hulk, Spiderman, Dr. Doom, then head back to Deuling Dragons.