I don't understand what digital code represents a Bitcoin. I do no understand this statement from The White Papers
"Each owner transfers the coin to the next by digitally signing a hash of the previous transaction and the public key of the next owner
and adding these to the end of the coin."
Does that mean an infinite amount of numbers are added to the end of the coin? I doubt this to be true but why isn't it? Again, what is then the original number that the "hash" is added onto?
"We define an electronic coin as a chain of digital signatures." There is a helpful diagram in the paper explaining the concept. If Alice has a coin and wants to give it to Bob, she takes the transaction in which she received the coin, adds Bob's public key to it, and digitally signs it to create a new transaction. Then if Bob wants to give it to Charlie, he takes this new transaction and adds Charlie's public key to it and signs it. And so on. That's what it means to create a chain of digital signatures. Anyone can prove that Charlie is now the legitimate owner of the coin because they can verify (with Bob's public key) that Bob signed it over to Charlie. And we know that Bob was the legitimate owner before Charlie because Alice signed it over to Bob. (How the very first owner got the coin is addressed later in the paper.)
What's the algorithm the hash uses and how was this determined?
SHA-256. All hashing in Bitcoin is SHA-256 (except for addresses, which use RIPEMD-160 as well).
What about the timestamp server? The timestamp server takes a hash of a block(or group of transactions) and publishes it but how can it be deduced from the hash what block it refers to?
Because the chances of two valid blocks having the same hash are so astronomical that anyone who suggests it's anything less than impossible will be laughed at. If you have a hash, and you have a block with the same hash, you can bet your life that that is the block the hash refers to.
Finally, does a block contain only one transaction?
No. You were right the first time:
The timestamp server takes a hash of a block(or group of transactions)