1) No. You just missed to empty the recycle bin.
2) Thats possible. After a dist upgrade you should go trogh the perfect setup guide for the new dist version and ispconfig version that you sue and install missing packages and ispconfig might have to be updated afterwards.
3) the default one from linux, crypt with salt.
4) take a look at the perfect setup guide for debian squeeze, it might be nescessary to patch a line in libc.