1. P. 175 Creating Opportunities - gives the example of knocking the pistol out of the guard's hands.  It has the imprisoned person using a raise to pick up the pistol. Why?   Also, if I understand the action mechanics correctly, Lets say Person A has 5 Raises - guard has 4 (does the guard get raises?); if Person A uses 2 raises (one to hit the guard for 1 wound, one to create the opportunity), does that mean that the guard goes next with 4 raises to 3?

Answer: First, the imprisoned person uses a Raise because they are 'taking advantage of an Opportunity' (which costs 1 Raise). The opportunity is they are now 'armed with a pistol' and not fighting barehanded or with a melee weapon. They don't need to pick up the pistol if they don't want to. Opportunities are very broadly defined and do not require a mechanical benefit.

Second, technically Person A cannot use 2 Raises in that fashion. You can spend X Raises on a single Action (For instance, dealing Wounds on a 1 Raise / Wound basis) but cannot do two actions in a row unless they continue to have more Raises. So in your example Person A would spend 1 Raise to deal 1 Wound to the guard. Now, both the Guard and the PC have 4 Raises. Generally PC's go first against brutes, but I let Villains go first in the case of ties. If the guard is a Brute, the PC goes again and spend their 2nd Raise to create the opportunity but it is 2 actions separated by a decision of who goes first at 4 Raises.

2. P. 183 - In the action sequence example, Brand's dice exploded.  Why?  How do Exploding Dice work in the new system - I thought they only came out when the character was sufficiently wounded.  What is their effect?

Brand has 5 Ranks in the skill he is using, which means his 10's explode. They also explode with enough Wounds (Which is why some people have made the Wounds actually go back to the 'beta' version that 9's counted as 10's instead)

3. P. 184 - the way it reads, the villain has to spend a raise to lift her pistol and then another to fire.  If so, wouldn't she be at 3 raises instead of 4?

Drawing a weapon does not cost a Raise. I believe it's mentioned twice just to reiterate since the GM's flow was interrupt by a player comment.

4.  P.184 - Brand changes approach.  GM says costs 3 raises.  Why? - 2 to avoid the pressure, but why the 3rd one?  Where in the book is this - I missed it.

Taking an Action not directly related to the Trait + Skill (Approach) you rolled costs +1 Raise unless you have the Advantage "Dynamic Approach". So if I declare I'm fighting with my sword and roll Finesse + Weaponry but then want to take an Action to "hide" it costs 1 Additional Raise.

5. P 185 - Brand runs through the Brutes without any risk of being hit.  Why?  When can a Brute Squad attack?  In the example, they don't.  I understand that a Brute Squad does damage equal to their strength.  When do they do that damage?

Brute Squads are a 'consequence' that normally deal their Wounds at the end of a Round. Some Brute Squads (Assassins) can deal their Wounds at other times, but in general Brute Squads deal damage at the end of the Round. This way if a Brute Squad is defeated before the end of the round they deal no Wounds.

6. P. 189 - In the example, Adam's encounter with the thug could have devolved into an action sequence.  How does this work? Does it work?

When (or even if) a Dramatic Sequence turns into an Action Sequence is generally decided based upon what is happening. If the encounter would involve a lot of potential action (other than just defeating a single target) then it's probably best to go to an Action Sequence. If it's just dealing with a small group or 1 brute-like person it's best to keep it a Dramatic Sequence. There are no hard and fast rules for this.

I can't answer the quesiton on Villains with much authority. I've pretty much thrown out the whole tracking Villain Influence in my game and just go with what works at the time :)

Harley's done all the hard work here, so I'll just fill in a few gaps.

Lets say Person A has 5 Raises - guard has 4 (does the guard get raises?)

Not unless the guard is a villain, so probably not.  In the example, it's implied that the guard has a gun.  This probably isn't a great example of actual play, but it serves to show how Opportunities are created.  I wouldn't read too much into it.  Against a Villain, Harley is right.  The player can't spend two raises, 1 to do a wound and another to create an Opportunity.  Against Brutes, that's perfectly plausible since Brutes only act at the end of the round (unless they are Assassins and the GM spends a Danger Point).

Villains - it seems to me that based on the Villain's mechanics - even a weak villain (5 villainy points) can be strong very quickly, a 3/2 villain spends one story on a scheme that succeeds - is now a 3/6 villain; and so on... or am I reading it wrong?

Yes, that's technically how it works.  However, keep in mind that 7th Sea is VERY focused on the heroes.  So if you're thinking of having to manage a bunch of villains' influence off-screen, you'll probably want to rethink it.  The Influence economy is designed for the heroes to disrupt.  So villains shouldn't be racking up influence if the heroes don't have a chance to foil the scheme.  So Cardinal Verdugo doesn't gain +1 rank every other game session from his stronghold in Castille while the heroes are mucking around in Inishmore.  This probably speaks to some of Harley's issues with the schemes system.

Heroes and Villains introduces some modifications to the scheme system, but they create about as many problems as they solve.