1. The 'wallet' does not contain the actual coins but rather the keys (pointer) to your coins in the block chain.
2. The address is really a public key/private key combo.
3. Wallets are encrypted to protect the private key.
1. The wallet contains your private key and some other information. This key basically makes you a blockchain moderator.
2. I always thought that the address was the public key but you are probably right it is public/private keys hashed.
3. Wallets are not encrypted by default you have to encrypt them.
Hope that helps...