There's a person in my guild who only has Factions and he has learned the game very well. The starting island in Factions will teach you the basics so take your time with the quests and don't rush with the story and leave the island too early.
Can't say about others but I find Prophecies pretty boring after playing Factions. Has very little challenge. Probably because it takes so long to get to level 20 in it while Factions will take you there more quickly so you'll be using your skills while fighting, not the numbers on your hero menu.
You can't craft anything yourself. Using npc's to craft armour is what you'll have to do to get better protection and stats. They also can craft weapons but that's not as essential since you can get those from collectors basically free, just need certain items to trade for them. Finding the right collectors and seeing what they want, check GuildWiki:
http://gw.gamewikis.org/wiki/Main_Page
Bookmark it, loads of information there you'll no doubt be needing later.
Regular salvage kits is what you can use on weapons and items the monsters drop. This'll get you certain amount of common crafting materials, depending of the item. Expert salvage kits are used to get better stuff out of them, like runes and weapon upgrades. When you get a purple or gold item drop, use identification kit on it to see what's in it. More on weapon upgrades
here.
I don't really know anyone who would only use just one character. Pretty much everyone I know have every character slot in use. If you are asking how to make a second character, it would be the very same process what you did on creating your first char. And yes, new characters start at level 1 at the beginning of the game.
What might comfort you is that all characters in one account share the same storage space, so getting better gear to your new characters should be easier this time around.