I've used WM for a number of years now, Never had a issue with them and never had funds frozen.
Long as you stick to the terms then you should have no issues using them.
Trading bitcoin with other individuals is against their terms or not ? I guess there is no way for them to findout but I want to know just to make sure my money are safe from any harm .
Money exchange isn't allowed by WM. But everyone's doing that and unless you mansion exchange in payment note you mostly will be fine.
There is a built-in instrument (WMX) to exchange WM<->BTC