NSIS nsDialog has disabled back/next/cancel buttons?

Question 1

Calling nsDialogs::Create/Show in a section is never valid, they can only be called in the create callback function of a custom page.

Some buttons will be disabled after the instfiles page (Already installed, cannot cancel or go back) but this is done by NSIS itself, not nsDialogs...

Question 2

If you put your call to nsDialogs:Create in a section it will be run when the installer is installing files and such. In that state you won't be able to keep navigating through the pages in the installer and you are stuck.

Your notice about your custom page running at the end of the installer is really what you should be trying to fix, not dismissing it as the wrong way (it's the only way). NSIS-scripts are quite simple in many ways. For example, pages are loaded in the order that they are declared. So when you declare that you want MUI_PAGE_WELCOME, MUI_PAGE_DIRECTORY and the others you are also setting the order of them.

# Installer pages
!insertmacro MUI_PAGE_WELCOME                                 # First page
!insertmacro MUI_PAGE_DIRECTORY                               # Second page
!insertmacro MUI_PAGE_STARTMENU Application $StartMenuGroup   # Third page
!insertmacro MUI_PAGE_INSTFILES                               # Etc
!insertmacro MUI_PAGE_FINISH
!insertmacro MUI_UNPAGE_CONFIRM
!insertmacro MUI_UNPAGE_INSTFILES

So if you then try to keep all your code together and add your custom page alongside the functions that handle it, it will undoubtedly be the last page in that order.

# Installer pages
!insertmacro MUI_PAGE_WELCOME                                 # First page
!insertmacro MUI_PAGE_DIRECTORY                               # Second page
!insertmacro MUI_PAGE_STARTMENU Application $StartMenuGroup   # Third page

...

# Input dialogs
Var Dialog
Var Label
Var MyTextbox
Page custom configLocationDialog configLocationDialogLeave    # Last page
Section configLocationDialog
  nsDialogs::Create 1018
  Pop $Dialog

So to illustrate this I took your code and brewed it down to basically the page you wanted.

    # Included files
!include LogicLib.nsh
!include nsDialogs.nsh
!include Sections.nsh
!include MUI2.nsh

# Installer pages
!insertmacro MUI_PAGE_WELCOME                                 # First page
Page custom configLocationDialog configLocationDialogLeave    # Second page!
!insertmacro MUI_PAGE_FINISH                                  # Last page

# Installer languages
!insertmacro MUI_LANGUAGE English

# Input dialogs
Var Dialog
Var Label
Var MyTextbox

Function configLocationDialog
    nsDialogs::Create 1018
    Pop $Dialog
    ${If} $Dialog == error
    Abort
    ${EndIf}

    GetFunctionAddress $0 "configLocationDialogLeave"
    nsDialogs::OnBack $Dialog $0

    ${NSD_CreateLabel} 0 0 100% 12u "Hello, welcome to nsDialogs!"
    Pop $Label

    ${NSD_CreateText} 10% 20u 80% 12u "Hello World"
    Pop $MyTextbox

    nsDialogs::Show
FunctionEnd

Function configLocationDialogLeave
    ${NSD_GetText} $MyTextbox $0
    MessageBox mb_ok $0
FunctionEnd

Section -Main SEC0000

SectionEnd

Question 3

The NSISEclipse plugin generates a lot of code, including a set of macros that execute the various pages that are displayed:

# Installer pages
!insertmacro MUI_PAGE_WELCOME
!insertmacro MUI_PAGE_DIRECTORY
!insertmacro MUI_PAGE_STARTMENU Application $StartMenuGroup
!insertmacro MUI_PAGE_INSTFILES
!insertmacro MUI_PAGE_FINISH
!insertmacro MUI_UNPAGE_CONFIRM
!insertmacro MUI_UNPAGE_INSTFILES

The trick is to inject the page call at the right step.

# Installer pages
!insertmacro MUI_PAGE_WELCOME
!insertmacro MUI_PAGE_DIRECTORY
!insertmacro MUI_PAGE_STARTMENU Application $StartMenuGroup
Page custom configLocationDialog configLocationDialogLeave
!insertmacro MUI_PAGE_INSTFILES
!insertmacro MUI_PAGE_FINISH
!insertmacro MUI_UNPAGE_CONFIRM
!insertmacro MUI_UNPAGE_INSTFILES