Fractional reserves are not free to banks. The bank must pay it's deposit holders and bond holders interest on the money on deposit and lent. When a bank lends money to someone, they need to make sure they are an appropriate risk and price the loan accordingly. When a borrower falls behind on their payments they need to make collection efforts to collect what is owed by the borrower. All of these things cost money.
Bullshit. The fractional part is created out of thin air. That is what makes it fractional. They don't pay any interest on this newly created money.
I think you take the "create money out of thin air" expression too literally. They get money from depositors and they loan it out. That's how money appears to be created since both the depositor and the borrower act as if they have the money.
This is exactly correct. This is why banks need to keep a certain percentage of their money either on deposit at the federal reserve or in their cash vaults, so when depositors want to withdraw their money to another bank or want to withdraw cash fiat they are able to do so.
Banks must also keep a certain percentage of each new loan on hand as a loan-loss reserve to account for potentially losing money on the loan.