4. I want to disconnect the on demand coil. Will it be more efficient to empty the water contents of the coil, or leave it full of water?
If it is immersed in the water jacket it makes no difference.
5. What is the best way to button up the coil? (Caps, blow-offs, etc.)
It makes no difference unless the coil develops a leak and then caps are all that are necessary.
6. Since the hot water heater will be in unconditioned space, should I wrap the tank with insulation? Can this cause any issues?
The heater is adequately insulated already and some manufacturers recommend NOT wrapping the tank.
Unless you are heating with oil, why are you using an electric heater. The efficiency rating is actual, but the operating costs are usually more than a gas heater.