I will try to answer your questions but please join the visualmicro.com forum for more help.
Can you use the debug tools (like watch a variable) from the dropdown menu without the optional USB debugger?
EDIT: Yes you can watch variables and expressions when debugging with the Arduino connected.
You do not have your Arduino connected? As a newbie I think the answer is "No". We are working on making the Atmel Simulator easier to use with Arduino, you can read how to try the Simulator here
but I think it is too complicated at the moment for a newbie and some experts
can the IDE highlight the open and close brackets
I think so, please look at the VisualAssixtX menu options. VisualAssistX provides many useful features and is responsible for intellisense and code/syntax color/highlight
How to see or what is intellisense? i.e., I type "volatile" and think valid variable types should pop-up, is that right?
Yes, this should be automatic!
This sounds like an installer issue. You could try to run the installer again and click repair but I recommend installing version 1305.21 of Visual Micro from our download site. On the download site click DOWNLOADS>(beta channel)