1) You can try this , but I am not certain if it will work any longer after the last WordPress update If it doesn't, use the plugin below. Please open up register-portfolio.php in /includes/admin/ folder. Make a backup copy of the file then find line 30 which looks like:
'rewrite' => array('slug'=>$slugRule,'with_front'=>true),
and change it to look like
'rewrite' => array('slug'=>'','with_front'=>false),
Save the file, then go to the theme backend Settings > Permalinks and all you need to do is hit save without changing anything to flush the old permalink rules.
You can try this plugin http://wordpress.org/extend/plugins/custom-post-type-permalinks/
Generally this is not recommended since now you will have pages and portfolio items sharing the same space. So if you accidently create a portfolio item that has an identical name to an already created page, you may find yourself re-installing the WordPress database from a backup.
2) Yes. You should use the Template Builder to create a template. Add portfolio within template builder to your new template, and within the options you should set "Portfolio Single Entries" as 'show on single pages' Take a look at this image to get a better idea. http://i.imgur.com/VeuMQ.png Afterwords you would add the custom template to a page which would become your portfolio, or however else you want to do it. Please check the instructions.
3) Please try using this plugin http://wordpress.org/extend/plugins/codestyling-localization/ which should do the trick. This is an article for someone having an identical problem with an unrelated plugin http://wordpress.org/support/topic/plugin-breadcrumb-navxt-where-to-translate-search-results-for-string and should help you get the idea how to go about this, since '2 search results for: rapsody' needs to be translated in a specific manner.