Paul, here are the answers to your questions in the order that you listed:
1)Hydraulic system oil is added through the filler cap under the seat (the one you observed in step 4). The oil level check plug is a 1/4 inch pipe plug located on the RH side of the axle housing a little ways above the floorboard about in line where your heel would be if you were in the seat.
2)For fluid, you need to use "tractor hydraulic fluid". Universal fluid is generally the same, however, on the back of the container, make sure it says "meets or exceeds Ford spec #134 A or B" or something similar to that. They will usually also list Deere and Case spec numbers on the same container.
3)This is the transmission reservoir. It is a separate compartment. Use the same fluid as in the back. Late 3000's had a dipstick in the shift cover, early tractors had a similar 1/4 inch pipe plug as in the back, not sure which side, but it will be roughly half way up.
4)see answer for #1
5)Are you depressing the clutch pedal? You have to do this to engage the PTO. You step on the pedal, then engage handle, then slowly let up on the clutch to start rotation. If it still grinds using the clutch pedal, try reducing the pedal free play down to an inch or so if you have more than that. If this still doesn't do it, you likely have clutch trouble that will require a tractor split to repair.
One more thing, if your arms are going up and down while the engine is running, you likely have an internal leak somewhere in the 3-point. Adding oil is not going to correct this. Do the arms settle to the ground pretty fast when you shut off the engine? If so, suspicions confirmed.