There is not enough details  for us to help you.
Much of it depends on how you have designed the form  and it's associated
workflow.

1.) You have to publish  the form.
2.) Depends on how you programmed the form
3.) Metadata in SharePoint. What other details?
4.) Depends on your workflow  and how you programmed the form
5.) Yes. The employee  and manager  will need to login  separately. How else would
the workflow know who was the employee and who was the manager.
6.) You can use an infopath  or SharePoint to design the workflow.

If you are new to SharePoint, Infopath and workflows it is going to take a lot
of work to get this working properly.

MS has a sample vacation infopath form.

I agree that this will be a LOT for a SP beginner to tackle. How did you get
thrown into the fire like this?

Infact the company has provided online classes for
sharepoint.And I have many doubts regarding the same.Infact i was purely into
dotnet and was forced to Sharepoint.

Well feels like concepts can be very clear if I had support from your end
and from our disucssion group end...I just say impossible is nothing. I really
thanks one again for your keen response.

There is a huge difference between InfoPath and SharePoint. InfoPath is a
standalone product and if you want to use it with SharePoint you need either
Forms Server or SharPoint 2007 Enterprise.

Well, you are asking a lot support from a volunteer group.
Several people here are employed by companies that do this type of work and it
would be unfair to expect them to provide answers.
Others well may not know InfoPath and be unable to provide you answers.
And the 3rd group who know InfoPath probably cannot dedicate the time it takes
to help you: code, publish  and troubleshoot problems.

That is only true if you want to use web forms for Infopath. You can use the
full Infopath fat client against WSS only. Obviously, each desktop that uses
the forms needs the client licensed and installed. I know of several locations
doing this.

True. He could just make it run on the client but I think his request was to
run it from a SharePoint site.

Take a look at infopathdev.com, msdn forums on the topic and
alecpojidaev.wordpress.com. I found those useful.
Peek into the freely available book '7 development projects...'. Also
consider buying a book like 'designing infopath  forms.

Also you should see if your company will send you to a SP class. If you are
going to be developing solutions with SP, you really need to fully know what it
can do OOTB. There are so many things it can do, and devs sometimes just default
to building a custom solution. But I've found that SP will provide a good
portion of what the customer needs right OOTB.

Actually that is one of my main tasks at my office now. I develop
Infopath forms for automation through our SharePoint portal. Our desktop
image includes infopath  as part of the office install so needing a web
service wasn't an issue (though we do use SP Enterprise, we use digital
signatures a lot, and that required a separate add-on installed to
function....and average users don't have the admin rights to install it.
Working on getting it pushed out, but it isn't a priority)

I basically publish  the templates to a form  library in SharePoint and
then write workflows designed primarily to notify approvers when it is
their turn using SP Designer.

The infopath forms can be very nice. When published you can have it
create columns for every individual field you want, then once the data
is in SP, you can create views for "Reporting" purposes.

Beware of publishing a template to different libraries though. Hard
lesson learned. I had a form with roughly 150 fields (which translated
to 150 columns in the list in SP). Once you publish it to a list, it is
"tied" to it. If you publish the same template to a different list, then
try to publish it again to the original list (say you update it with a
new field or something) you will find that it no longer recognizes the
field/column connections established during the initial publish. You
will have to manually go in and reconnect each field with its
corresponding column. A solution for this is to make copies of the
template if you intend to publish to multiple lists. Each copy would
then stay tied to a specific list.

This only came up for me when I was toying with a Main submission list
and a separate archive list idea. I have since decided to try and keep
all documents in one list and just change the status.