Wow, that's a lot of questions! LOL
First off, "Button Polyps", or Protopalythoas, are a great beginner soft coral! Congrats on your purchase!!
As far as placement goes, your LFS is correct. You can place them snugly in a rock crevice or glue them, either way with proper care they will encrust and grow out. Beware of what rocks you want them to grow on. In many cases, softies have a knack for taking over the entire rock they are placed on. One common practice is to glue them to a fist sized rock and isolate it from the main aquascape. It makes for some strikingly gorgeous colony growths that don't take over your tank.
LED is becoming a more predominate lighting source for reef aquariums. Yes, your polyps will grow with LEDs. But don't fuss too much over this. As long as you have a source of light (T5, metal halide, LED) softies will grow just fine. Your reef shouldn't need more than 6-10 hours of light. It is probably best to start with short lighting periods 4-6hrs, and GRADUALLY work your way up to longer ones. This will help fight algae growth while you find that "sweet spot" for your coral's happiness. If you would like more information about lighting recommendations, please list your current light setup (i.e... What's under that hood!?!)
Lastly, as long as your water parameters are in order, that rock should not be an issue. If you are just now setting this tank up, you may want to hold off on adding anymore new corals/fish until your tank cycles. Water test kits would be very beneficial at this point. Continue to do your regular water changes and ensure your keep the tank topped-off with fresh water to maintain steady salinity. Ultimately, you want water conditions that is best for your corals and other livestock (if you have them).
Good luck!
Rando