Six transaction confirmations are the recommended value for transaction finality on the Bitcoin blockchain and thus its recommended to set the value at 6 confirmations for Bitcoin SONs. (reference: https://web.archive.org/web/20210218094358/http://bitcoins.net/guides/bitcoin-confirmations)
Funds equivalent of 200 PPY is set aside and its distributed among SONs proportional to their performance. This value can be changed by the committee.
3. I have also noticed that my server is running at 100% at all times. Is it trying to mine test btc?
No, when you are connected to SONs network as a seed or a SON itself, you won't be doing any PoW mining. SONs just listens on the Bitcoin network for any incoming transfers to Peerplays BTC addresses.