[TheLastSuperman]

I would go this route:
- Install vBulletin 3 (Yes, if you purchased a vB4 license in the past or more recently a vB5 license you can still download and install vB3 HOWEVER can only run one version at a time - you're allowed one test site though, so you know ).
- Impex (import) from SMF 2 to vB3.
- Upon successful import and cleanup with the site showing in vBulleitn 3, now upgrade to vBulletin 4.
- If you wish to upgrade to vBulletin 5 now is the time to do so i.e. immediately following a successful upgrade to vB4 otherwise simply forego the upgrade to 5 and run vB4.

As for your other concerns:
1. It depends on, if you want to use the vBulletin CMS or not (see below for more on that).
2. You can install vBulletin in any folder i.e. /testvb/ then once you successfully complete the import and upgrade(s) to whichever vBulletin version you can then move SMF to another folder, move vBulletin to /forum/ or /forums/ and simply update the bburl in the database to reflect the new location and it will work fine. If you decide to utilize vB4 and it's CMS then you could move the CMS to the root i.e. public_html and still run the forums from /forum/ and such. Alternatively you could install Wordpress and use it as a CMS, then install a SSO/Bridge and connect vB to Wordpress since many love the ease-of-use of Wordpress respectively.

Reference: https://vborg.vbsupport.ru/showthread.php?t=323562