I don't know much about hosting your own site but, yes if you use the standard shared hosting you are using the company's hosting space and if their server goes down so does your site. You'll find though that most hosts are pretty reliable. If you go with the big names like godaddy.com, etc you won't have many (if any) issues with downtime. At least I haven't.
If you have windows xp then you should be able to run dreamweaver with no problem. Hopefully some other server experts can address your other questions.
