You will need the q1.game game pack, which is available from the GTKR website, or a GTKR install (NetRadiant doesn't come with it by default). This will let you add the correct entities in game.

Radiant needs the wad files to be in your id1 folder for them to display in the texture browser and the 3d view. Remember that you can use a relative or absolute path in the wad line of worldspawn to find the wad files. And also note that there may be issues with using backslashes in the path, so use a forward slash instead.

The default build menu can be changed by editing the XML file. Or you can just use the command line to compile.

As for the actual tools, most people around here will tell you to use a set of tools that they believe is the best out there; however, when pressed to explain why it's the best one, they resort to shouting "because it is" at you, without ever really explaining why...

My personal preference is to use hmap2, due to ease of use (it's one file, rather than 3 or more), and not seeing any appreciable difference in results to other tools.

There will be a number of factors in your decision, though, and in the end, you should use what works best for you. Anyone who tries to bully you into using what they think is best without explaining why, should be told in no uncertain terms to fuck off.