#1 issue - password is asking for caps, lower case, numbers and special characters. How/where can I reset the requirements?
Edit the password field in CB > Field Management to change its validation rules.
#2 issue - I am completing the registration but it is not taking me to paypal. It strips the password and I reenter and still nothing?
Strips the password? Can you be more descriptive of what's happening? You don't go to PayPal until after registration where you'll be shown the basket for your subscription to be paid.
#3 issue - previous member with profile information tries to login / should take them to profile and membership options. First login redirect is set to index.php?option=com_comprofiler&view=userprofile
That will send them to their profile on first login only. This means their last visit date should be empty in CB > User Management. If it isn't then first login won't do anything for them.