1. If you're using an ipac, no. Joy to Key is only necessary if you're using a joystick/gamepad type encoder. Even then, mame supports joysticks so it'd still only be necessary if you're running some app or program that only takes keyboard input. If you're running a jamma board though, double check that you shouldn't be using a jpac instead.
2. I can't help with this, not familiar with hyperspin
3. This question doesn't make sense to me. Asteroids is a vector game, so you want vector lines to appear. This is a good thing. Can you be more specific on what the problem is?