I don't see how setting Safari preferences to open links in a new window has any relevance to the rest of the opening statement. Google is a search engine. You don't "Have" Google, it is out there in the wide world and is accessible to everyone by entering the correct URL. Safari has a link to the Google search engine built-in, top right of the window, and has not failed me yet.
The Safari setting only applies, like it says, to other applications. Mail, iChat, etc. If you want Safari to open a link, from a web page, in a new page, right click the link and choose "Open Link in New Window" (Control + Click works for those with a one button mouse)
Don't understand the stretch window thing. Safari, unlike many Windows browsers, will only take up the space that any particular website is built to. When you click on the green button at the top left of the window, Safari will adjust to exactly the size that the web designer made the web page. It will NOT stretch the page to fill the entire screen.
Downloads: Downloads will go to wherever you have set the Safari preferences to. Personally I did the following. Created a folder on the desktop and named it Downloads. Opened Safari preferences and on the line that says "Save downloaded files to" I selected "Other" in the drop down menu and then chose the folder on the desktop called Downloads . Next time you download something from the web, it will appear inside this folder.

Hope this helps

Anything else?

P