That is unfortunate that they won't calculate the earnings or losses but your plan on how to calculate them sounds reasonable.
The 60-day limit applies to when you take a distribution and return it to a retirement account. You can convert the funds sitting in the traditional IRA anytime but of course, be aware that any earnings will be taxable when you convert it therefore it is usually best to convert as soon as possible to avoid having earnings.
Yes, I would not withhold taxes since any taxes withheld and not replaced count as an early distribution and would be subject to the 10% early withdrawal penalty if you are under 59 1/2.
@bigben3
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