1. What's the difference? I do know he wants to get away from Tolkein so that could be an indication.
Dungeons and Dragons is psuedo historical fantasy: it means the game is set in period of time before the modern era: i.e. a medieval world with knights, peasants and castles, etc. Vampire and the World of Darkness is a modern fantasy in that the characters have computers, cars, cell phones and, yes, guns.
2. I'm not sure what you mean, but I really don't see how any system could actually be character driven.
Most roleplaying games are a combination, I suppose. An Action driven RPG however, imo, is one that focuses on constant conflict or action. It might be called cinematic even. A character driven RPG however, again using the World of Darkness as a good example, is one where action and fights is really secondary to the goals, motivations and intercharacter interactions within the story. The mechanics of the World of Darkness is called the Storyteller system for that very reason, whereas the d20 system is so named to focus on the mechanic that drives the action.
3. Uncertain, I do know that he is trying to make all stats equally important. For example, he has a stat called Aura, which essentially is an indication of magical power and affects things like magical items and spells. A swordsman of an Aura of 2 would add two extra dice to damage with a magical sword while a mage with an Aura of 5 would add 5 additional dice to the pool with a magical sword.
I only asked because if it focuses on one specific sort of mechanic, it wouldn't hurt to name it after that one thing.
4. I'm not sure. I think he will go both ways since he will have a name for his mechanics, a name for his world, and an overall name for his game.
The amount by which these things is tied together is something to pay careful attention to from the beginning.
It means an agreement not to talk to people about what you have read or done. If you didn't sign anything, don't worry about it. Most companies or individuals putting together a new game would have their playtesters sign something in which they agree to keep it to themselves until after publication.