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1) The 'free' thing is the encounter itself correct?Yes.
2) After the PC's has won and defeated the 'free thing' do all the weapons, auto-successes, or both get discarded before the next thing gets revealed?Weapons and auto-successes are single use cards.
3)When 'The Thing' reveals an NPC thing that the PC's have to fight (after the 'free' thing is defeated), do the PCs get to draw their hand back up to five? (Like the encounter is starting all over again from the beginning), or are they forced to only fight with the cards they have left.Drawing up happens in the Draw Phase, so there is no drawing up to five between fighting Things.
4) If a PC-Thing is reveals himself, does he get the four action action cards like he would have during a blood test reveal, or no?No, but auto-success cards played by PC Things now work in reverse by *increasing* the number of successes necessary for the Outpost Players.