The UK government has seized her passport and she cannot return to the US. Is this legal for them to do??

That is a question to address to the UK government and also to the US consulate as the passport is the property of the US government.

If i wanna go out USA do i need my passport when I leave and come back USA? Do you recommend me to renew my passport?

You should obtain and use a refugee travel document for return to the US along with the resident card.

Question: Will us marrying here in the US interfere with his current visa status (business)??

If the business visa you are referencing is a B-1 marriage to a US citizen may cause an issue with CBP and or the consulate as to the question of...

What are my chances of being Deported ?

You may be removed for being an overstay. You may also have additional removal charges for criminal violations. Recommend you retain an immigration...

Will I face arrest if I go back the legal way via guarded border?

No way to foretell what the Canadians will do and what information they have in the US system.

H1B transfer denied yesterday, I-94 valid till Nov 2016.How long I can stay to find another Job?

You do not indicate what your status was before applying for H1b nor do you mention if you are maintains that status. More information is needed to...

Can I go for stamping with my H1B amendment petition pending as I have valid H1B petition valid till Dec 31 2016. Please advise

A visa may be granted if you have a valid approved petition and a valid visa. For particular facts speak with with your employer's immigration...

So my question is- I am the principal applicant, does it mean that I need to submit a I864A?

follow the instructions of the NVC and the form carefully.

Instructions to file I751

Part 7 is the petitioner's signature and part 8 is the spouse.

An employer may request only the documents listed on form I-9 to determine identity and employment eligibility.