mediathing - 1.Has to be a .txt file in a TAB delimited format but can be named what ever you like (xxxx.txt, newfile.txt, lastupload-08-03-2008.txt )etc
2. It must have the model heading but as from the readme file you can exclude unwanted columns but not tried it personnally.
3. It will upload new products, and update others if in the file if the status column is marked 1 if that column is marked 9 it will delete that product. Other than that just upload new products and it will not effect the rest of the DB.
CJ Internet Sales - Try a test, download a complete file from the DB, remove all the rows except the first row (Headers) and two products with out changing anything else and then up load that file back into Zen, this should give you a result of Two products updated. If this works it means your current upload file is incorrect in foramt some way so you must check that. Check you have 'EOREOR' on the end of each row.
jaskarn - Yes this would be possible, if you know php, if you don't have a look at cron jobs this may be able to do it for you. I don't use cron myself someone else maybe able to advise you better.
buyersparadise -
This will join column A1(sheet1) +'.jpg' and put it on sheet2
=CONCATENATE(Sheet1!A1,".jpg")