In answer to your questions.
There are no known Linux viruses in the wild i.e. you won't get one.
Spyware does not work on linux.
The linux filesystems do not need defragging and there is no messy registry to have to clean up.
If you use a router to connect to the net then you just plug the machine in and it should just work. If you connection share then I'm afraid I don't know.
Installing from a CD is the easiest way, however if you can't use the drive then:
http://www.jonlee.ca/installing-xubu...ect-continued/