The stain you have looks like a good start. I would suggest a tinted top coat to even out the colour. Minwax Polyshades is a product that I have used with excellent results even on woods that are difficult to stain evenly. Good luck.

Pouring a new slab would be the best solution, of course. That said, do you have the height to frame a wood floor platform on top of the asphalt? Asphalt is pretty soft and doesn't like to stay put, so trying a levelling compound would be disappointing, I think. A wooden platform would offer something rigid while also allowing a space for insulation so you don't have to have a cold floor.

I'm in Canada, not Alabama, but I would say that yes, you should use a vapour barrier. A properly sealed vapour barrier will prevent drafts from getting into the house. Remember to install it on the warm side of the wall to prevent condensation inside the wall cavity.

I just completed the same job at my son's house. Don't go to the trouble of grinding out the mortar around the window frame. My guess is that it will chip away from the block quite easily once the window and jambs are removed. Chip away all of the old mortar surrounding the old windows and start fresh. Install your new windows level and plumb, then spray foam around them. Once the foam has set, repoint the space around the new windows with mortar, if you wish. I only did the outside, making sure to slope the mortar away for good water runoff.