I'm sure someone more experienced will be over to correct any nonsense I suggest, but in my little experience (I use a vertical Brinkmann charcoal smoker, nothing at all fancy), I would answer your questions like this:
1: The water bowl I would normally fill. It adds a bit of moisure to the smoke, which can't be a bad thing. You can also fill it with beer or something else, mix with herbs to provide a little extra taste. I'm sure some thyme and beer would help do a great chicken.
2: Covering it up doesn't seem to make much sense if it's filled with something, because that would block the steam. A full water pan does help regulate temperature, though, so I would guess that if you didn't want the added moisture from steam, covering up a full pan would still provide some extra temperature stability.
3: I just place the wood over on my charcoal. Many people wrap a few pieces in foil and make plenty of holes in the foil, then place that on the charcoal. This would stop the wood burning, but allow the smoke out. I prefer placing naked wood directly on the coals, though - I just make sure that the wood has had a long soak in water first. It seems to generate more smoke that way.
Hope this helps, good luck!