will the use of copyrighted purchased fabric sewn into pillows & resold violate copyright & trademark laws?

This is actually quite a strong topic for debate. First and foremost, look into the selvage of the fabric. There is a STRONG likelihood that there is a limited license that states that the fabric can only be used for personal use and not resold in any items. HOWEVER, some do not say such a thing. The MLB has been fighting this issue and I have a belief that the fabric you have probably has such a disclaimer on the selvage or edge. If you are in doubt, contact the fabric manufacturer.

The people that sold you the fabric very likely had a license to sell only for personal private use. You will likely violate trademark restrictions if you sew the copyrighted material into your own product and then re sell the images. To be very very safe either do not resell the copyrighted material or contact the holder of the copyright or trademark and ask if there is a procedure for application to use the material. If there is, find out about it. I guarantee you it will likely be a lengthy process involving your sending samples of all of the products you propose to sell and then turning over a percentage of the profits to the license holder.

As much of a pain as this process will be, it will be less painful than just going ahead and selling someone elses copyrighted material and then having them bring a federal case for infringement. I've had clients in that seat, and it is not a comfortable one.

It depends. Most designs, including fabric, are copyrighted, explicitly or implicitly, but when they are sold openly and legally, then the first use doctrine typically exhaust the rights of the designer to restrict use.
If a particular trademark is part of the fabric, then you will be restricted from transforming the product into another product, but not from resell it, as is, to others, because the exhaustion of rights took place upon sale to you.
You should consult a trademark lawyer such as myself.