You need to firstly install an instance of WordPress on your host account, as this is required in order to use our themes. The database is set up as part of that process.
Yes, users can reset their passwords using the native WordPress user functionality.
The admin is emailed notification when new users sign up and place ads.
If a transaction fails for a paid ad, then it won't be published, but outside of that it's not handled within the theme other than showing the transaction was not completed.
You can read more about the WordPress and theme installation in our documentation page
here, which will give you an idea of what is involved. Thanks.