1. SATA is an interface for storage devices to communicate with the computer. SATA II has 3gb/sec of bandwidth while SATA III has 6gb/sec the drive itself may or may not be this fast, but there are SSDs which max out the SATA II bandwidth, so it is recommended to get a SATA III SSD.
2. Yes, it will work, you can mix and match any SATA parts and everything will run at the speed of the slowest component.
3. 64 GB if you want windows and 3-4 frequently used games/programs.