Hi,
1. Yes, the Entity Framework is fine in a web-based application. DevForce works very closely with the EntityFramework.
2. DevForce is the component which helps you get the data across the wire. In a nutshell, it creates a WCF service for you automatically, and then lets you communicate to the server through the WCF service. This is how the data gets from the database down to your application, and then back up to the Server again. If you didn't use DevForce, you would have to write the WCF service by hand.
If you just getting started, there are some great videos that Ward did that show a sample application being written from scratch. Then create a new project with a DevForce template and try connecting to your database.
While you can use stored procedures for business logic, it's not really a good idea on multi-tiered web application. More typically, you will have logic in the domain entities (domain centric) or in a middle tier before the database (the ViewModel in MVVM). This makes it much easier to switch databases if you should ever need to do that.
Sorry, don't have any good graphics to hand that show this.
Greg