Starting from the top:
Q1) I have Thomson Router 585v7. I can change the WPA on the router, but how do I change it on the PC's.
A: you dont. You connect to the modems wireless connectiion which asks you for the WPA-PSK Key and you provide it.
Q2) What is the 'Wireless PIN'. How is it used (note not the same as password = WPA Key).
A: the PIN is only used for WDS/WPS wihich allows gateways and other devices connect withouth the use of a passphrase. In short Automatic Authentication. More information can be found here:
http://tinyurl.com/cy9tvwQ3) How can I monitor network traffic.
A: there are many methods and there is a lot of software. For your needs, search youre query in google, bing, or yahoo.
Q4) Can I password protect my pc to stop others on the Network from accessing my files.
A) Yes you can. Check the windows help file for more information about this.
Q5) I am not expecting attacks, but can any such attacks be monitored.
A: Please see question 3
Q6) I note that the router operates in certain bands. What are the bands, not their numbers but their nature.
A: simply put. They are specific frequencies for the data to be transmitted
Q7) What information is transmitted by the router to the outside world. Can it be limited.
A: The information transmitted as you would expect is the encrypted data (if encryption is used to scure the connection) including the passkey to decrypt it. In what way do you mean limited.
Hope this helps.
~Eric jumped in just before me. The above is assuming you are using Windows, version XP or above.