To start staking all you need to do is deposit your LQTY token to the staking functionality. Once done you will start earning a pro rata share of the issuance and redemption fees in LUSD.
Your LQTY stake will earn a share of the fee equal to your share of the total LQTY staked, at the instant the fee occurred.
No, you can withdraw your funds at any time.
You can only stake LQTY tokens. LUSD can be deposited into the Stability Pool instead.