You pick and knit at the same time, really. Insert the R needle into a stitch on the edge (pretend it's a L needle) and that's pick up. To knit it, you wrap the yarn around and pull through. Do this from the R side around just the same way you'd knit the rounds (which answers Q 3.).
The pick up 3 out of every 4 is based on the st/row ratio which is usually 3 to 4, your may be 5 to 7, or 2 to 3 may work better. Try picking up 2 out of every 3 sts and see if that works for you, or just pick up the right number of stitches evenly around.
sue- knitting heretic