Hi Bindu,
1. The first page of the letter is case specific, whereas the subsequent pages are standard instructions. So the request for passport on first page supersedes the general information on following page.
This is a general opinion of the other forum members who received Passport request.
I am planning to send an email to NDVO today for the clarification on the same. I will update you if I hear anything from them. I am planning to send my documents by 21st March. So, if I don't hear anything from VO before that, I am going the send my Passport too.
2. It is not necessary to use a registered government post. It's a matter of choice and you can use any reliable courier service to send the documents. They would have specified clearly incase they do not accept the couriers. I will prefer the courier service for obvious reasons.
3. Paying RFRF in CAD $ or INR is again a personal choice. Since you are in India, it will be convenient to pay in INR. Also, at later stage, when you need to find out if the DD was en cashed or not, it will be lot easier if the DD was made in INR.
- Grasshopper