130mm and 135mm is the spacing between the rear dropouts. 6-speed MTBs were 130mm, early 7-speed were 130mm but then later ones went to 135mm, and 8- and 9-speed MTBs are 135mm.
Friction mode is where the shift lever does not click all they way to the next gear when moved. You can move it as little or as much as you want and can even put it "between" gears. The lever is held in place with friction thus the name (oK so indexed levers are technically held in place with friction too so don't ask me why the name "friction" is used - it seems to me that analog and digital is a better choice of terms
). To get good indexing with indexed shifters, you must match your cassette or freewheel with your shifters - 6 with 6, 7 with 7, etc. Friction shifters, however can shift any speed cassette/freewheel.
Many will say you shouldn't reuse old spokes but I've done it a couple of times with success. You may need to get some new nipples, though, as those get corroded and some may be deformed.
A new hub will come with bearings, axle, cones, spacers, etc. so you won't need to swap those parts over from the old hub.
I recommend a new freehub hub. They are superior to freewheel hubs. You can put a 7-speed cassette onto a 8/9-speed freehub by first putting on a 4.5mm cassette spacer.