jon,
some of what you ask is explained under the "Instructions" tab of the spreadsheet.
Moment of inertia is the same concept as momentum except in a circular fashion. The more mass you're rotating, the more inertia it will have. If you want details, check into some or search the web. Friction is just the drag of the engine, more friction, more drag less efficiency. Put the number too high and the motor will not turn. I've not played with these numbers to confirm their use in the current FMS model. As always, keep a copy of your original, change some items and see how it affects the flight characteristics. Experimenting is half the fun. Here's at a NASA site that calls a moment torque.
Number of elements refers to any irregularly shaped wing or control surface. It's best to think of it as a description of wing area. Some of that is in the spreadsheet too. Just plot out any of the surfaces that use ELEMENTDATA according to the summary in the spreadsheet. An individual ELEMENT is just a collection of parameters at a specific point along the span of a surface.
Polare is the moment, drag and lift at a specific attack angle and reference by number in the surface section of the .par file. If you find your model seems a bit odd at a specific angle of attack, you may want to adjust these. So far, I've used the ones that came with the 5 planes included in Alpha8.
-- ggunners