1) Where's the Pyro? -> Near the combo -> Can I manage? -> Yes
-> No -> Do damage somewhere else
-> Dead -> Give the combo a shot
Obviously that's not nearly everything, but it's a good start. Another good thing is to keep track of who's around; you don't want to be caught disguised as an engie if he's with the combo.
2) Pubs are good, but keep things difficult. Use the kunai to put yourself at low hp; YER w/ DR to force yourself to shoot or trickstab
tr_walkway isn't too bad for practicing stuff like stairstabs and air straffing (put the ramp to max power and try to land on people's heads)
3) Ambassador is a great choice due to it's long rage abilities. That said, the Revolver can do a lot of damage if you're up close. Some people think of it as good vs bad aim day. I'm not a fan of L'étranger personally, but some people are.
The watch is purely situational, but keep in mind that the CnD is quite viable; I like to use it on first point defense among other things.
4) Hard to tell. A lot of being a spy revolves around gamesense, which is completely different in pubs and lobbies. The nice thing about spy though is that it's hard for a team to blame you if you're doing bad. In fact, if your team isn't doing well, the other team won't be distracted enough for you to do your stuff.
*** I main spy and play it fairly often, but I'm not that great so take this advice with a grain of salt.