Using COM-08653 (12 Button Keypad) as simple buttons on microcontroller

According to my current sketch, is the logic correct in terms of what I want it to do?

Well, no, because I don't see where buttonstarpressed is called.

void loop()
{
  char key = kpd.getKey();

...

}

You don't use "key" there so why find out what it is?

I would expect you to test (eg. switch on) the value of key and call the appropriate function.