Question 1 - Not unless you re-purchase the stock, the sale of which triggered the wash sale. You are correct in that the losses from wash sales are disallowed. However, they are not eliminated. Rather, if you were to re-purchase the stock, your disallowed loss is added to your cost basis. Thus, keep your records in the event your broker does not correctly capture your adjusted cost basis or you change brokers.
The wash sale period is 30 days before, and 30 days after the sale of the security in question. Thus, when you are trying to determine whether you have a wash sale, start with loss you realized when you sold a security. Then, look to see if you purchased the same, or substantially same, security 30 days prior and 30 days after. The wash sale rule includes options on securities. It also applies across all accounts wherever situated.
Question 2 - As you note, the wash sale rule does not apply to Traders who have made the mark-to-market election. Under the MtM method of accounting, all security transactions result in ordinary gains or ordinary losses. If you make the MtM election, take note of the fact that your gains will now be taxed as ordinary income, and you will also pay self-employment tax, i.e., Social Security and Medicare taxes. However, your losses, because they will be ordinary, can offset ordinary income, such as wages, dividends, interest, etc.
Whether you are better off under a MtM election is something you will have to decide. You will probably need to establish a separate account for your MtM trading. Combining MtM trading with other investments will make your reporting/accounting much more difficult.
Question 3 - That is why you will likely need two separate accounts. Your disallowed losses that were the result of wash sales were capital losses. Under MtM, because the wash sale rule does not apply, losses are characterized as ordinary. In connection with MtM accounting, you will need to complete Form 3115 as well. Form 3115 is lengthy, and while much of it may not apply to you, you should seek guidance from a tax professional to ensure that it has been properly completed.
Another point to remember, TurboTax does not support--at least as of this date--the statement that you will need to include with your return if you elect MtM accounting. TurboTax can prepare Form 4797, but IRS instructions provide that you must attach a statement to your return which explains in greater detail all of your transactions. On Form 4797, you will just be entering total gains and total losses. The statement, much like Form 8949, will contain all of the details.
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