Yes it can still be used despite incorrect dob.

Best to have an attorney review the RFE.

No this is not a legal option for USCIS.

No do not list the employment if you never worked there.

You can file the I130 for her and she should be okay.

Yes follow the form instructions per USCIS webpage for guidance.

No you cannot work without valid visa and filing of I765. Consult with an attorney for guidance.

You will likely receive a Monday receipt.

Yes you should return every 6 months if possible, but 1 year with travel permit is okay.

Yes but the case may be scrutinized.