Yes. See ArM5 p.130 box - level 5 guideline. That copy of the body would be dead, though. The ArM5 p.129f CrCo(Me) ritual The Shadow of Life Renewed could give it the semblance of life.
Yes. See ArM5 p.152 Exchange of the Two Minds, and HP p.96ff The Living Corpse. The latter is a long, involved article on giving your spirit control of a corpse. Moving your spirit in such a way will make you lose your soul in the process, which goes to its reward.
A spirit gets Might, and loses the Gift.
Generally not. But there is the AM p.56ff The Fertility Ritual, which allows for a CrCo lab project making a newly conceived child Gifted.
Altogether, the result of HP p.96ff The Living Corpse is not an AD&D (or such) simulacrum, since that game's focus is vastly different.
When I recreated Abaddon for fifth edition, I made him as a Living Ghost (from The Mysteries Revised Edition). The only cannonical example of such a being. I put forth the idea that he operates through "Duplicants" (that term being borrowed from a Blue Oyster Cult song). Which works much the same. He creates and animates a corporal shell with magic maintaing the illusion that he is a living corporal being.
A Living Ghost is still Gifted. It may invent new spells and enchantments and do most of the things he could when he had the body he was born in. TMRE makes no mention of the disposition of the soul. I wouldn't worry about that. None of these characters have souls to begin with, for all they are consists of ink on paper (or electric text in a document). It is all fiction. Manipuate it in whatever way suits your aesthetics and pragmatic needs. You need no explaination nor are obligated to give one.
Thank you for your input. OneShot, thanks for the references. Well done and much appreciated. I saw a couple of those and all the pieces seem to be there but getting them all in one place is tricky. While I get I could fudge things, a) I'm not the GM, and b) I'm just wondering if its something in the spirit of Ars and if there is anything that forbids it within the rules set. It's easier to convince a Story Guide if there is mechanical precedence. :mrgreen:
What happens to your spirit during the process of becoming a HP p.96ff Living Corpse you have to sort out with your SG: see especially the options on p.107f there.
In the most favorable case - Option Two - the spirit might become a magic ghost, with Magic Might, and (p.109) "the character replaces the Special Virtue: The Gift with the Special Virtue: Magic Spirit." See RoP:M p.100ff Magic Spirits for the general properties. But how to apply these rules is outlined in HP p.108f.
An example to show to your SG is HP p.110 box Darius as Living Corpse.
Becoming a TMRE p.70ff Living Ghost from Hermetic Spirit Magic by successful Mystery Initiation results in more power. It is also the achievement of a lifetime and generally requires a supportive Mystery Cult.
The Living Ghost retains its Arts, can work in the lab, and in general conforms to TMRE p.133ff Immortal Magi and the respective learning constraints.
EDIT: You can create a corpse in ArM4, and permanently bring basic mental functions to it with The Shadow of Life Renewed. Exchange of the Two Minds exists there also, and it can even be made permanent. Combining both might be the way to go for you.
Of course this is not a way to live on after being utterly obliterated in a dungeon, as - IIRC - the AD&D (?) Simulacrum is. But there are less dungeons in ArM anyway.