?1.. No you don't need to know sheet music.. Tablature is commonly used these day. There is tutorials here to teach you TABS..
?2.. Either type guitar is fine.
They musically the same. It depends on what music you like and want to play. Acoustic is a bit harder to play..
?3.. Basically it the playability... Low end guitars have lesser quality parts which may not hold up or not be suitable for good set up.. the best way to pick one is buy trying.. How it feels to you, how it sounds.
Don't discount the Asian made as they have become of better quality.. The major brands have guitars made over seas..
If possible borrow a friends guitar and learn a chord or two and or have a guitarist friend go with you to try them out..