1 -> Correct. There are "inner" and "outer" links, and one "gender" can only attach to the other. There exists a "half-link" for when you *really* need to add only one link to a chain, but with horizontal dropouts you should never be that desperate.

2 -> I have no specific knowledge of Raleigh chains, but in general the ability to add links from one chain into another seamlessly is not guaranteed. The width of the links and the distance between them are standardized across the industry, but internal dimensions like the size of the link pins can vary.

3 -> O_o 3 ideas: The price includes moderately-expensive labor, they were offering you a really fancy (and probably incompatible) racing chain, or they wanted to take you for a ride. My guess is #1.

4-> For a Sturmey-Archer geared hub bike, you want a 1/8" chain. This'll also be called "single speed" chain. http://www.amazon.com/KMC-Z410-Bicyc...dp/B0013CH2M8/ is an example of the type of chain you want.