Bummer that no one replied to this yet (tl;dr, I guess).
First: Welcome back. Now on to your questions:
1. I'd prefer you play 100 $1 SNGs than 20 $5 SNGs, given your bankroll. You can afford to play in the $5 ones, but I think you are considering moving up for the wrong reasons. You WANT to play with as many bad players as possible.
2. I prefer cash games over tourneys, but the choice is yours. One thing I will say is that cash games are more straightforward poker, where to play STTs properly, you have to play "differently" than you might think. Like, did you know you're supposed to fold QQ in the early stages? Sounds crazy, but it's true. Later on, down to 4 players, you should be pushing in with any two cards in most situations. Search on ICM and posts by Kurn. There's been lots of good stuff here, especially posted from him. Or..... play cash games
3. is an absolute must, especially if you plan on playing cash games. It is an invaluable learning tool. there are other pieces of software that are great, but most of them are PT add-ons anyway. That' where you need to start.
4. The books you should read depend on the game(s) you decide to play. If you want to master SNGs, buy Moshman's new book. For MTTs, the Harrington on Hold'Em series is great. For cash games... save your money and read hundreds of threads in our Hand Analysis section.
Final 2 suggestions:
-Post a lot of hands, and try analyzing hands other people have posted.
-Open a Full Tilt account and start getting . It's a great site, and for lower limit players, the rakeback alone can turn you from a break even player into a sizable winner.
GL.