I just posted a link to my Xen how-to on your other thread.
Q1: I use Xen and have all my data drives under dom0. They are shared with both guests (e.g. Windows) and other PCs using Samba. Alternatively, you could try the following:
a. Install a dedicated NAS VM.
b. Pass through the SATA controller to the NAS VM (PCI passthrough) and share the storage (Samba, whatever). This way the NAS will have direct access to the SATA controller, for performance reasons.
I would start using a Samba shared drive under dom0 or another VM and see how that works.
Q2: Use LVM volumes for all partitions except /boot. Then use ext4 for Linux dom0. For the guests under Xen, use RAW (that is, don't format to anything under dom0, and use the guest VM to format the drive). For a Windows guest, use NTFS, never use the Microsoft equivalent to LVM (can't remember how it's called). The RAW file systems can then be mounted under dom0 using kpartx - see http://forums.linuxmint.com/viewtopic.php?f=42&t=111783
For backup, you got several options:
1. Use the LVM snapshot feature and back up to a dedicated backup drive using simple Linux commands - this is what I use. If you need backup scripts, let me know and I post them here. The advantage of snapshots is that you can backup a running system. I personally don't backup my Windows guest while it is running, only when the guest is turned off, but I do backup my dom0 Linux host this way.
2. Use RAID1 or RAID10 or whatever you prefer - of course always software RAID ! (Never use the RAID feature in your motherboard BIOS!)
3. Using LVM you can also mirror volumes (disks).
I don't know how familiar you are with LVM, but let's put it this way: It's a shame that Linux Mint doesn't format disks per default to LVM, like Fedora. There are so many advantages to it and once you converted to LVM, you don't want to look back. For installing Linux Mint on LVM, see here: http://forums.linuxmint.com/viewtopic.php?f=42&t=108442
Re Xen versus KVM:
KVM has gotten a lot of publicity and many people would probably default to KVM. When I built my current PC I was looking for a virtualization solution that would make dual-boot obsolete. I read the benchmarks over at Phoronix and thought that KVM would beat Xen any time. Well, I now see it differently. The Phoronix benchmarks are, in my opinion, superficial at best (I would call them flawed).
Performance wise I believe Xen to be at least as good as KVM. But Xen has one advantage over KVM: PCI and VGA passthrough is available now for a long time and there are dozens of user reports and how-tos one can follow. KVM is new to that arena, and although the developers are working hard on it, there are still some glitches. I also find the Xen documentation to much better than the KVM documentation.
Given the right hardware, and the right configuration, both options should work. I chose Xen and my experience over the past 8-9 months has been very positive. I've started out with LM 13 Mate and Xen 4.1.1 and run now Linux Mint 14 Mate and Xen 4.1.3. The installation of LM14 on top of LM13 went smooth, the Xen hypervisor was updated using the Update utility. I find no need in installing Xen 4.2, and can wait until it hits the repository.
CPU resource allocation between guest and host works wonderful. For example, running RAW photo conversion in Lightroom (Windows guest) while ripping a DVD with Handbrake under Linux dom0 gives me 200 fps for Handbrake (which is 50% of the maximum I get without running heavy stuff on Windows), and no detectable slowdown in Windows. When the Windows guest is idle, the CPU resources go to dom0 (Linux). By the way, I assigned 10 VCPUs to the Windows guest and 2 VCPUs to Linux dom0, as I do the heavyweight photo editing/conversion stuff in Windows. Here some Passmark benchmarks for reference (all benchmarks are from the Windows 7 VM): http://forums.linuxmint.com/viewtopic.php?f=42&t=112013&start=40#p702361