1) Is there any reason to save old wallet files if I'm generating a new backup after receiving some BTC?
Which wallet? If you are talking about Bitcoin-Qt, then it might be a good idea to keep a few of the recent backups in case the most recent backup turns out to be damaged or unrecoverable for some reason. The advice might be different if you are not using Bitcoin-Qt.
2) Is there even any reason to generate a new backup after receiving some BTC or does the wallet backup just contain the private keys associated with the public keys, and it will be the exact same file regardless if the balance is updated?
Which wallet? If you are talking about Bitcoin-Qt, then it uses a new address (and therefore a new private key) every time you send a transaction (although it doesn't tell you that it used a new address). It isn't necessary to backup after EVERY transaction that you send or receive, but it is a good idea to backup on a regular basis. This way you will be sure to have a backup of any recently generated keys/address, and you'll have multiple copies in case one copy turns out to be unrecoverable. The advice might be different if you are not using Bitcoin-Qt.
I opened two different backups of the same wallet in notepad. Why are they different? Wouldn't they be exactly the same file if all they contain is the private key?
Which wallet? If you are talking about Bitcoin-Qt, then there is transaction information stored in the wallet.dat file in addition to the private keys, the bitcoin addresses, and any description you've added.
I'm using the BlockChain.info online wallet. Are you saying Bitcoin-Qt sends the BTC from a different address and thus changes your address every time a transaction is done? That's crazy..
For your final note, "the bitcoin addresses".. Does that refer to the address that sent them to me? Why would it store that? Shouldn't that be available on the block chain and thus unnecessary to store?
This whole wallet situation is enormously confusing for new users and is a massive barrier to entry. I can't see BTC being adopted mainstream when it's this difficult to work through how to take care of your wallet and protect your money.
Is there an in depth article explaining how wallets work? I've read several short articles at various websites online, but none of them go deep enough to truly understand how the system works. Someone saying here that you can lose 99 BTC by using the wrong backup file is very confusing and makes no sense to me.
Thanks for spending the time explaining a little bit.