Read Nick Gammons code carefully all of your questions are covered including the clock crystal... a clock signal is provided in his programming sketch and yes the reset is connected to a pin controlled by the ISP code, Not the board reset. On an Uno it is pin 10, I've never used a mega for ISP programming... I have a dedicated Uno and a modified Adafruit programmer project shield where I connect the ISP reset to pin 10 instead of the board reset... It works well and I can program anything that has a 6 pin ISP connector or bare chips in the Zif socket.
Doc