Dear sam you ask too many different question. I will try to give some answer to what I know.
First you need to select the way you go to show your video. One popular way is the flash. YouTube use flash.
So the tools that you can use is the one that convert the video to flash streaming file. There is all ready one from adobe. Other tools is video editing if this is what you asking for. Video editing with asp.net or with other programs like vegas video.
How to not allow a user to download a video ?, you serve this video from an ashx handler, this handler just read the video file from a protected directory and send it to the video player. The id of the file that is going to play you send the id on the page header, or from inside redirect to that page to hide it as much as you can, but expert users can find it and download it at the end. How ever you can avoid the scanning of your page by a robot that try to download them all. All this is not that easy but not that hard also. This task is a full question and a tutorial alone, and as I say I think that is near impossible to avoid at the end the user not get your video if he won it to.
Other way to protect your video is to scramble the streaming header, and then on your flash player decode it again back. That way even if they get them ,they can not play it anywhere.
You need to know to programming also flash and probably make communication with the video flash and your pages using Javascript, and modify the player to your needs. All of that its not an easy task, but there are many resources and tutorial that can help you.
So start with the flash video on google.
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