"One of my questions concerns place names. Should I enter the modern name or the name of the place when the event occurred?"
Traditionally people include modern place names and jurisdictions in parentheses, e.g., Virginia (now West Virginia), USA. That gets a little messier when you have several elements of the place name and its jurisdictions that have changed:
Prachatitz (now Prachatice), Prachatitz (now Okres Prachatice) Böhmen (now Jihočeský kraj), Kaiserthum Oesterreich (now Česká republika)
Since that can be hard to read, some people use this format instead:
Prachatitz, Prachatitz, Böhmen, Kaiserthum Oesterreich (now Prachatice, Okres Prachatice, Jihočeský kraj, Česká republika)
Some people choose to Anglicize these place names, especially when distributing information to English speaking audiences unfamiliar with the geography and place terms. Thus...
Prachatitz (now Prachatice), Prachatice (now Prachatice district), Bohemia (now South Čechy), Austrian Empire (now Czech Republic)
Finally, there are those who wish to include everything in one location. This gets a bit redundant when multiple languages are used (in this case, English, German, Czech). So...
Prachatitz (now Prachatice), Prachatitz (now Okres Prachatice [Eng. Prachatice district]) Böhmen [Eng. Bohemia] (now Jihočeský kraj [Eng. South Čechy), Kaiserthum Oesterreich [Eng. Austrian Empire] (now Česká republika [Eng. Czech Republic])
All these examples aside, I recommend the first method. Use the language and place as recorded in the source document for the event. For anything before the Napoleonic era, this generally means using ecclesiastical jurisdictions, not political ones as I have given. Those are very likely to have changed as well. For example, Prachatitz is also a Catholic parish and church. It is now in the diocese of České Budějovice, but during the time of the Austrian Empire, it was part of a different diocese.
Some would argue that knowing the how the Catholic Church is organized from the parish to Rome is unimportant. I tend to agree. If you know the parish and diocese, then you can generally determine where records were housed, where they may have been centralized, and how they were organized.
"If a person was known by multiple name throughout their life, I know that you can have "alternate names", but how do you decide which name to set as the "main" name? I have been using the name I *think* that person would have perferred or thought of themself as."
Use a different name fact to record each unique instance of a person's name as it was written. For example:
Jon Smith - sources 1, 4, 8
Jonathon Smith - source 5
John Smith - sources 2, 3
Michael Smith - sources 7, 9
Mike Smith - source 6
Choosing which of these facts to make the preferred fact can sometimes be arbitrary. Many people might create a composite name here like Jonathon Michael Smith or Michael Jonathon Smith. Others might treat "Michael" as an alias, as silverfox describes. That works fine as long as the surname hasn't changed as well.
For public trees at ancestry.com, when you're hoping to connect with others researching the same people, you should use names that will give you the best chance of making matches with others: Jonathon "John" Michael "Mike" Smith.