First, I should say that there is a fine resource in the "Beginner's Guide to Total War" by frogbeastegg; it is located in the Guides section of this forum under Medieval. This has excellent answers to your questions; however, if you're like me and don't want all the game's secrets handed to you, and would rather discover what you can by yourself, don't read the whole thing - just what you need to get by.

As for your questions:

1. On difficulty, I'd go with Normal. You shouldn't get frustrated as long as you've gone through the tutorial first; neither side gets any combat or morale bonuses. Once you've done one campaign, play on Hard at least, or Expert (but be warned that the AI gets a significant morale bonus on Expert which can be frustrating).

As for your faction, there really are quite a few that are perfectly suitable for beginners. Spain, England, and the Almohads are probably your best bets; they have good starting positions and good unit rosters, particularly in the infantry department. However, the Byzantines, the Turkish, and the Russians are quite fun to play with for only slightly more advanced players; you'll need a good dose of cavalry tactics to be effective with them.

As for the era, Early or High would be fine (but don't choose Russians in High unless you want a really tough fight). The later you make it, the quicker you get to the game's best units. However, if you choose Late, you don't have as much time to achieve your goals. Early is best if you are the adventurous Crusader type and don't mind starting out with some pretty basic units.

2. Definitely Do:

A) Build up your empire economically and technologically. Farming upgrades are great for increased income; also build structures that increase troop morale (like churches) and troop effectiveness (like armourers).

B) Build a navy, and focus on it early. You will need those ships later in the game and they take a long time to build; they will help with trade and troop mobility. Dominance of the sea is often a key to victory.

C) Assign positions of authority wisely. A governor with high acumen increases a province's income, so be sure your wealthy provinces have good governors. A governor with high dread increases loyalty. Posts that add to a general's command rating are best reserved for your good generals, as this can make them great.

D) Watch province loyalty; try to keep it above 120% at all times. This isn't too difficult if you keep an eye on tax levels and garrison your provinces appropriately, while converting conquered provinces to your religion. Use the "shift" key to check loyalty quickly. Rebellions and faction re-emergences can be a pain; it's best to just avoid them.

E) During battles, attack engaged enemy units from the flanks or rear. This is basically the key to winning battles - flanking, and getting favorable unit matchups (cavalry beat archers, spears beat cavalry, swords beat spears, etc.)

Don't Waste Time On:

A) Sieges. After a few, they're all the same, and you'll get the best castle-assault results if you just come in with a big army and autoresolve them. You don't even need siege engines if you do this.

B) Diplomacy in the late game. Once your empire gets big and powerful, no one will ally with your, accept ceasefires, or generally do anything friendly. Once you get to that point, just crush them mercilessly if you're still interested in the campaign; otherwise, just give it up and do something else.

C) Playing every campaign out to the bitter end. I recommend doing Glorious Achievement campaigns instead of conquest campaigns anyway; they tend to be more fun.

Hope this helps!