The answer is yes, and its fairly straightforward, you can run a local Login server or you can run a Login server publicly that acts as a local Login server
No, its actually quite simple, and you found yourself in the best place for how to do so!
Yes you can, any login server installed prior to September 2019 is considered legacy and should use the Migrating from a Legacy Login Server Database guide to do so
Yes, we support 15+ encryption algorithms and most specifically use Scrypt, if you want to learn more you can read this link
Simply, no there is not. But setting up a new config is very simple, you can find it at Configuration