Answers to your specific questions... 1. no, these are correct put them in the place as directed in the article 2. yes 3. yes, but if this is entered through the design view you will get an error saying it is an invalid format. Switch to source view to add. (However, although I did get the error, it did appear in the source view too, so you'll just have to experiment with this).
Follow the article exactly BUT there is a slight error in both the config file for the proxy service and for the config in the axis2 file (to enable the SMS transport)
In the service xml the description tag surrounds all of the target so move the empty description element outside the closing target element.
The axix2 config file needs the transportsender element altered slightly to be transportSender - note the capital 'S' for sender.
That is how I got this to work. Good luck.