I haven't updated the documentation yet but the .04 version is still valid. The only change is that you can set the default domain for the user logging in so that they don't have to enter it and the location of entering the settings has changed in DNN 5 (under Admin->Extensions and click on the pencil icon).

When you entered the settings did everything pass? Did you get any error messages? Can users manually login? Do they get logged in if you go to http://<yoursite>/desktopmodules/authenticationservices/activedirectory/windowssignin.aspx? What OS is the server running?

As for your questions 3 is answered, we're working on 1, and for #2. No there isn't current a way to not have the domain name proceding the username. It's something I'd like to be able to give administrators the option of stripping but I haven't worked out the logistics of implementing it on sites that run in a mixed-mode environment (sites that have both internal and external users) where there's a possibility of username collision. I.E. There's already an external user registered on the site with the username Satish.Chadha when an internal user with the same username goes to the site.