Congratulations! Cider is an addictive hobby . . . but you already know that if you make beer.
To answer your questions in order:
1. Yes, that funky yeasty smell (and possibly taste) will go away with time. Two weeks is pretty quick to drink cider and I am sure that there is still a lot of yeast in suspension. Cider is kind of tricky sometimes in that there is a lot more yeast in there than you would guess (that apple has a bunch of nutrients which make them happy little suckers). I have been making cider for the last four months or so and my first batches are just now getting to the drinking point (though they probably need another 3 or 4 months to really mature). Remember, cider is closer to wine than beer.
2. Lactose is a good way to back sweeten as it doesn't ferment (much). A general rule is about a pound of lactose per five gallons (but it is up to your tastebuds). I highly recommend disolving it in a cup or two of warm water and then adding it to your secondary (lightly stirring it in). Another option is to add a can or two of apple juice concentrate (don't worry if it has sorbates at this point) after fermentation is over. If you go this route add some K-meta and potassium sorbate first and let it sit for 24 hours. Then add the concentrate. This will result in a still cider (unless of course you keg it). The benefit to concentrate is that it adds back in some apple flavor and no hazing. I tend to use a little of both now.
3. Advice: Unless you want a really dry cider, try using an Ale yeast in place of the wine yeast. Cider doesn't need to be high octane (unless of course you want it that way). I have had good luck using Nottingham (seems to ferment clean).
Here is my procedure (YMMV): 1 Gallon Batch
1 Gallon Juice (Your choice, no preservatives though)
5 grams Nottingham - rehydrated per instructions
1/2 pound brown sugar and 1 lb honey (I like Blackberry)
1/4 tsp DAP
Warm juice to 120 degrees and remove from heat. Combine honey and sugar with warm juice until it has all incorporated. Mix in 1/8 tsp of DAP until dissolved. Cool to room temp (within 10 degrees or so), add rehydrated yeast and shake the living bejeebers out of it. Add airlock and place somewhere warm and dark. I keep my carboys in the basement (about 68 degrees). The next day I add the remaining DAP and give it another good shaking. Re-air lock. You should have good bubbling (1 bubble a second in an s-lock) by that afternoon.
When you are down to a bubble every minute or so, rack to secondary and add your lactose (if you want). After a couple of weeks I cold stabilize. ThenI rack to a tertiary with k-meta and sorbate and then backsweeten with lactose and/or concentrate. Let this bulk age for at least 2 to 3 months (I know, patience is a virtue). Bottle and enjoy.
If you are really impatient, go straight from primary into canning jars and put them in the fridge. Pour them off the yeast after a week into bottles and refrigerate. About a week and they will be ready to drink.
Lastly (gee, how did this post get so long?) . . .
Don't expect your cider to taste like woodchuck (or other generic brands) unless you add a couple of cans of concentrate and keg it. I am not knocking woodchuck (I am ashamed to admit I love the stuff) but traditional cider is not nearly as sweet . . . a slight tartness is often part of the flavor profile. Anyway, don't give up. The longer you age it, the better it gets.
If you have any other questions, feel free to ask.
(Whoo . . . somebody should be working right now . . . but would rather be brewing )