the code that is sent in the email is stored in a session variable. try the sessionTest.php script in the following post:
showpost.php?p=23826&postcount=2
to see if sessions are working correctly on your sever.
Yes, power store can be edited locally, then uploaded to the remote host.
As the developer setting up power store for the client, you should create all of the pages that will be included in the site, and set up the content areas that will be managed by the client.