1. As circuit height is 1000ft AGL, my instructor will nag me about needing to be higher in cruise mode but 1000ft AGL is the right height for circuit training right?

In FSFS it is - different airfields in the real world will have specific altitudes, but in the simplified version of FSFS - it is 1000 AGL.

2. Because there is no Climb Phase, I have to keep my landing lights on until I reach cruise height? that can't be right, what if I am cruising at 6000ft? Is Cruise mode also Climb mode?

Please see the manual for details on lights. Remember you can quickly search every word in the manual as it is a PDF document.

Could you please consider adding a Climb and Descent phase to smooth transitions between the phases of flight or am I missing the point?

Please see the manual for details on flight modes.

4. I fly mainly smaller airports without ILS approaches. I understand that a clean ILS approach is worth 20 points but why do I hear on every landing 'Zero points for ILS approach, Zero points for Glideslope accuracy etc'. Have I missed an option where I can deactivate the ILS approach text?

You get an overall score for your landing which includes a number of points for a good ILS approach, but the instructor also says "70% for your glideslope and 50% for the localizer" and things like that. If you get zero for both, it is likely that something is not set up correctly. Are you seeing the instruments reacting to the ILS signal?

Or,,, if you are actually flying a visual (non ILS) approach then make sure your instruments are not getting a signal. Also note that the instructor always grades you for the glideslope and for the (imagined) localizer even if you fly without ILS as it is still a vital part of a good landing.

5. Where can I find a list of keyboard shortcuts or are there only 4 main ones? i.e. Backup, Advance, Circuit, Display Data

Please see the manual for details on keystrokes.

6. How can I edit the keyboard shortcuts? I use CTRL+SHIFT+1-5 for other functions!

The keystrokes cannot be edited - but at least their are 2 variants for most of them.

7. I like to fly at dawn and sunset. This causes FSFS to disconnect regularly due to perceived time changes. Can I deactivate this somehow?

FSFS will not disconnect because you are flying at a certain time of day. It will disconnect if you change the time of day in the simulation while FSFS is connected. And it will disconnect (eventually) if you have FS2004 or FSX set up where it is synchronized with the PC's (real time of day) clock.

Thank you again for your wonderful software, I only wish that I had discovered it much earlier!

Our pleasure - hope this helps.