Not that I am great with computers but
1. There should be a menu regarding Copy CDs. I really dont know about Nero when I use Alcohol 120% but you will be able to find it under "Backup" menu.
2. If you're referring to "opening" the iso file then yes. If you're reffering to "drag and place" onto the blank CD then no.
3. When I copy a game CD, I always have the same problem when sharing with friends. What I used was a crack exe. to make the game work.
ISO are like winzip or winrar files. Bundling up a bunch of files from a single CD to a single file then reburning it use various CD burner programs. Be noted that SOME ISO files can be extracted only by using NEROs and such.