Check Anti-2-Block. If it has been tripped it will only let you set the load down.
4004EH and smaller it will be stamped into the base. 5005 and larger it is stamped on the risers that hold the main boom, normally standing at the back of the crane it will be on your left side riser.
Yes, anytime you see this it means you have water or condensated water in your fluid. The fluid needs to be drained and replaced with new fluid.
Anytime you see a frayed, kinked, or rusty cable you need to replace it as soon as possible.
No more than about 2 inches.
It is the bale and switch on the end of your boom that trips out to keep you from pulling your load too far up into the crane, which could cause damage or possibly break your lifting cable.
A minimum of 10 feet, but always stay as far away as possible.