1. and 7. If the card doesn't specify a location then you can target that type of character anywhere in play, which includes territories of all players as well as the field of battle.
2. The enhancements remain on the characters until the battle is completed (unless they specify for you to move them somewhere else) and then are discarded during battle resolution. The exception is weapon-class enhancements. 1 weapon-class enhancement can be kept on each warrior-class character that survived on that side of battle (so a good weapon could be kept on a warrior-class Hero if that Hero survived battle and returned to territory).
Not sure exactly what you're asking on the question between 2 and 3 or question 5.
3. Not sure what you mean by "10 card enhancement". Parmenas counts cards in hand so if your opponent has more in hand than you do when Parmenas enters battle then you can draw 2 cards.
4. Initiative is always given to the player currently losing the battle. If it's tied (either both players are losing or neither player is losing) it goes to the player who did not play the last enhancement in that battle. So in your example if a 7/7 character plays a 2/5 enhancement, their total numbers are 9/12. This means they are currently beating the 10/8 opponent character (9 strength beats 8 toughness) and are not losing to that character (12 toughness beats 10 strength). Initiative would pass to the 10/8 character.
6. A captured character is considered a lost soul if the character is human and is held captive in the Land of Bondage (or in a Site in the Land of Bondage). Captured non-humans (angels, demons, animals, etc.) are not considered lost souls and neither are captured characters held in fortresses or places other than the Land of Bondage.
9. During battle you can only play enhancements via initiative unless a card ability lets you play one at a different time. In most cases a hero must wait for an evil character to block before an enhancement can be played (since initiative is unknown until the evil character blocks).
10. That sometimes happens, yeah. If the defending player hasn't drawn an evil character and doesn't have a dominant or other card effect to use (such as an artifact) then they are unable to block.
Please let me know if anything above is still unclear or if you need further explanation about anything!
