1.For the first answer please refer to the following post
communities.bentley.com/.../18180.aspx
2. One can have modal or composite damping specified for dynamic analysis. One can enter damping as a certain percentage for all modes ( like 5% is entered as 0.05 ) or it can be specified on a mode by mode basis ( see Modal Damping Information in section 5.26.4 of the Technical Reference ) or you may specify composite damping to account for different damping of the materials/springs etc ( Refer to Damping Modeling in section 1.18.3.3 of the Technical Reference )
3. The inertial effect of the mass needs to be accounted for in a dynamic analysis. Mass is modeled in STAAD as loads and these are specified as part of the dynamic load case and applied in all possible degrees of freedom. The software internally coverts these loads, specified as part of dynamic load case, to masses. You may refer to the section 1.18.3.2 of the Technical Reference Manual for details on Mass Modeling. The pdf document in the forum post in answer 1 above, also contains good information on mass modeling.