mkytz15

3) Yes.
4) In a factor portfolio, there is only one Factor with Unit sensitivity to that factor. So, yes, In factor portfolio Beta for that factor is 1.
In a tracking portfolio, there are many factors. So, asking if beta for the portfolio is 1, is not a valid question. Beta is the sensitivity to a given factor. So, it is like asking: is sensitivity of a portfolio 1? I will then ask you: sensitivity of the portfolio to what?
For a multifactor model, we need to come out of the mould of CAPM model, where beta is always the sensitivity to Market Risk. In a multifactor model, there are many other priced risks, including market risk, thus, many sensitivities for each of those factors.
5) Yes, a market neutral portfolio will have sensitivity to market risk (beta) as 0. In your example, you will have to long some amount of money in IBM and short some amount of money in microsoft to get a market neutral strategy. These 2 amounts would not necessarily be same, if that is what you implied.