@slipstick - I do know that I cant use the Arduino to power the motor.
Thanks for the info regarding the common ground. I was afraid that if lets say 1A passes trough the Arduino GND, it will fry it.
@Robin2 - I'm experimenting with what I have right now. I'm not bothered with the voltage drop in the circuit above, first I want to clarify in my head the 4 questions that I asked in this thread.
BTW - I enjoyed your "Serial Input Basics" tutorial. I learned so many great things reading it, thanks ! 