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scholorship
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See our Funding and PhDs Explained sections for links and information.

Where to do final year project
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Probably best to do it in a different lab in order to broaden your experience. Ask your potential supervisor what they would recommend.

Masters and PhD
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If a PhD student with a distinction came up against one who was at a university that didn't offer distinctions then they would probably be treated equally. References for academic positions are taken quite seriously particularly when appointing newly qualified PhDs and it is these that would bear the most influence.

general info from team
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It is not possible to upgrade the result of your first degree. However for the purpose of starting a PhD or some other professional postgraduate qualifications a Masters degree can improve the way people view your masters degree grade. For example most PhD studentships require a 2(i) or equivalent - a 2(ii) plus a relevant masters degree is considered as equivalent to a 2(i).

References
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it depends on what the Prof writes, but if it's even half decent it'll be much more usefull than one from a postdoc.

viva exams
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It is unlikey you will be able to do this on a formal basis, but talk to your supervisor and see what they suggest.

Lack of post doc jobs
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I'm sure you've all looked already, but try www.findapostdoc.com

Phd program ranking
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If you want to be an academic, then make sure your supervisor is well reknowned in his/her field, or if they are early on in their careers make sure they are working in a department with a strong reputation. The reputation of the university as a whole is less important.

4th Year Science
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Finishing in three years is possible. A good supervisor should ensure that at the very least all your research work is complete in this period. Whilst you're writing up a part time job can provide a welcome break, as well as a few quid.

Publishing
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Publication is not essential for a science PhD in the UK. If you're lucky enough to get enough good results early on you may have enough work for a paper or two to be published before you submit your thesis.

getting a PhD submitting papers
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PhDs by Publication are relatively new, but schemes do exist. Generally the previously published work counts towards the PhD, but course work and/or further research still needs to be carried out. As with a PhD by Thesis, the research needs to 'demonstrate an original and significant contribution to knowledge'. A context document or explanatory essay will also need to be submitted (anything from 5000-25000 words). Such degrees are usually only open to people who have a previous association with the university concerned (eg a member of the technical staff).

You should only approach a legitimate university (in the UK any institution with a .ac.uk web address). Beware of institutions which advertise 'Life Experience' PhDs on the internet - if it's not hard work, it won't be worth the paper it's written on.

how to get a PhD position.....
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See our Funding and PhDs Explained sections for links and information. Try the Association of Commonwealth Universities or the Department of Education in India first. They may be able to help you to secure partial funding, which will allow you to take things further.

What to do with offers without funding guarantees?
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Our guess would be that the university may be making an application for funding with you as a named candidate. This means that if they get the funding and you have withdrawn they will not be able to use the money for another student. Their dilemma is to find a good candidate for the PhD who will definitely accept it, if they don't then they will have to wait a year to apply again.

It sounds like you've probably done the right thing, but it may be worth dropping them a note explaining that because of the risk of being left without any funding you are considering another opportunity and will be able to let them know on a particular date.

Msc Finance
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Look up the RAE rating of the departments concerned. This relates to the quality of research within the department. You can find these on the HERO web site

Pay?
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Just to clear things up, UK research Council studentships state the amount of money that you will receive. They will also pay university fees on your behalf. Student grants are tax free.