The up-to-date rules for Munchkin are at
http://www.worldofmunchkin.com/rules/munchkin_rules.pdf
and you can find rules for other core sets by going
here, clicking on the game in question, scrolling down to the bottom of the page, and clicking on the "rules" link.
To answer your questions:
1) Drawing 4 of each card as your opening hand is the current rule, so do that. Always go by what you see on worldofmunchkin.com, and what the mods on this forum say, and not any other site, as these are the official sites. See
this thread for more on that.
2) It's your choice; both are legal. The character creation phase happens before the first player kicks down the first door, so you are allowed to play your race, class, equipment, etc. at that time, but if you choose not to lay down your cards until your turn, that's your call. I believe Steve was being strategic in not revealing his cards until the last possible moment.