>1) Is it true you can download the .net sdk for free and then code c# in something like notepad to do beginning tutorial type stuff?

Too hardcore for me. Try out one of the free programming IDEs such as http://www.asp.net/webmatrix/
This is for C# in ASP.NET, but what the hey, that is the fun stuff.

>2)I've found a couple of online c# tutorials, does anyone have THEIR thoughts,etc. as to what is best?

Ones that I've found useful.
http://www.asp.net/Tutorials/quickstart.aspx <--- my ASP.NET bias is showing again
http://www.learnvisualstudio.net/DesktopDefault.aspx <--- Video tutorials