To attach a photo you'll need to use a website like Photobucket (100% free by the way).
The dryad looks great

, a nice pale wood tone. Good job. You could maybe give the skeleton a wash of devlan mud/badab black to make it stand out more.
1. Diluting paints can be tough. Too much water and the paint will run right off or wont cover it properly. You only need to add a tiny drop in most cases. As a rule of thumb, shake the paint pot vigorously and then open it so the lid is at 45 degrees. If the paint pours out of the lid into the pot smoothly, you should only add a little water. If the paint oozes out, you need to add more. Sorry that's not more helpful, but the consistency of the paint is something you will learn to judge as you go.
For drybrushing, DON'T thin the paint.
2. That's really up to you. Drybrushing brings out sharp, raised edges whilst highlighting allows you to decide where the highlights go. For armour, drybrushing is better I think.
3. You dont need to blend colours together and flat surfaces make highlights look strange. The dryad you posted looks good just the way you've done it.
Painted Minis in 2014: 510, in 2015: 300, in 2016 :369, in 2019: 417, in 2020: 450