There's a lot going on here and my morning's a bit crazy here, so this may be a little disjointed...
No. Each input (except for 7.1 Direct) has access to all of the 990's surround processing modes, and if the source is multichannel the 990 will preserve that. Additionally, the 990 will redirect center channel information from the center speaker to the fronts when there is no center speaker in the system.

I think you have missed a step in the 990's setup. Go back into the 990's setup menu and go to the menu called "SPEAKER SIZE." Fronts and surrounds should be "Small", center and surround back should be "None", and sub should be "Yes". Also, have you done any calibration (either the auto setup or a manual with SPL meter and the internal test tones)?

You may have been using 5 Stereo, or there may be some other issue going on. Stereo and Upsample modes with a standard CD would only be two-channel, no surrounds engaged.

First, I'd bump the crossover up to 60Hz, but that's just fine-tuning. Also check to make sure the fronts are small, as it should not be possible to select "LFE Only" for the sub if the fronts are small.

I'd have to get the manual for the player to answer that, especially since I've not used any Samsung players. Which Samsung do you have?
Sounds like a ground loop or similar interference. I'd start by checking to see how the analog cables are being routed - if they are parallel to a power cord, they are likely picking up some 60Hz noise from the power line.