Laby,
I just started using Launchbox as well, but I think I can answer some of your questions because I have ran into some of the same stuff.
1. Did you copy the files over from a Mac at any point? Because I ran into the same problem and I think it's because Mac's spotlight indexes every file and basically duplicates it as a new hidden file starting with an underscore. I had to show hidden files within Windows as I copied all my roms over and just manually deleted all the hidden stuff and then I was good to go.
2. I've already built a small 2 player bartop based with a Raspberry Pi, so this is more just opinion, but it depends on how big you want it to be and exactly what games you want to play. I originally planned to have 6 buttons per player plus a start and select(coin) for each. I couldn't fit it all onto the control board and ended up just using 4 for the second player and in the end it's all still a little too close together for 2 actual adults to play. I'm just going with 4 for each on my current build, and that's because the extra 2 just never got used on the last cabinet I built. If you are into arcade fighting games then I would consider it, but if your just adding them to try to convert the shoulder buttons or triggers from N64 or Playstation into an arcade setup your wasting the buttons, because those games aren't meant to be played that way. That's not to mention the lack of analog joystick. Just use a controller for those systems.
3. Sort of. I use Retroarch for the basics like NES, SNES, Genesis and so on, and in a Raspberry Pi setup I use it for MAME using some really old roms. That said, once I discovered Launchbox and decided to use a PC for an cabinet build I started using the current version of MAME with the standalone emulator, you might see a lot more games that work, and also a lot more support from that particular community. Also, I find Dolphin to run a lot better standalone, but that could be the age of the PC I am using for this. N64, I still haven't decided on yet. I am running Project64 because I remember it working way better around 10 years ago than what you can get out of a Raspberry Pi now, and I can still on a PC. But I hear better things about Mupen I just haven't experimented around with it enough yet.
5. Try the newest version of MAME maybe if you aren't already. I'm still learning that myself though and I don't really know what games are specifically meant to run on that hardware.
A little more background on my build: I found a 4 year old laptop in the trash that somebody must have gave up on (I'm in the Navy, sorting trash is basically an everyday thing out to sea) and I grabbed it thinking it would be a lot more powerful than a RPi for a cabinet. Turns out the thing works perfect after a hard drive wipe and I've been messing around with doing a PC based cab ever since. I can run Gamecube games full speed, arcade classics with the latest MAME and BigBox. I've spent nothing so far and it's working out well, but play around with an older PC before you drop a bunch of money on building one.