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1) Is linux "user friendly" (just like windows or more than windows)
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There are different versions of Linux, called distros or distributions and some are more user friendly than others. I use Kubuntu, the KDE vesion of Ubuntu. Ubuntu is reckoned to be quite "easy".
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2) How long will it take me to get familiar with linux basics?
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That's not easy for me to say. How long did it take you to get used to Windows basics? Some of the principles e.g cut, copy and paste are just the same.
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Why is this (the Terminal) window used for?
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I'm not sure about Vista but XP can drop to the (DOS) Command Prompt. It can be more powerful but it is not always necessary.
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Do I have to use it for installing and opening applications?How often I need to enter commands through "terminal window"?
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You can use it, but often there are other ways. One of the first books about Linux I looked at (now out of date) was called "Point and Click Linux". It can be that easy...