So now that I think about it we can actually do both. We can store periodically store merkle roots or block hashes in the Bitcoin blockchain. Also considering also using notary chains as another solution.

This is correct, you would quickly run into something called blockchain bloat, and well as some terrible legal implication. Instead we can use the blockchain to "point" to a file on the network. This also allows us to support multiple decentralized data networks.

Difficulty keeps going up by the maximum even though blocks have been taking longer than a minute for some time now.
A difficulty of 20.9 is only correct for a one minute target if the network is hitting something like 1.4GH. Your reported network hash has been increasing monotonically and I'm betting will do so even if only a single miner is connected. I'd guess that you have some counter somewhere in the code that's incrementing but never resetting to zero like it's supposed to do.

Whatever the cause, broke coin is broken.

We will have windows client ready at launch time. For other systems, you can compile from the source.

T-minus 30 minutes or less to launching client

EDIT: I'm not fond of the .biz either, all other domains were taken and I was brought in a bit too late to try to convince them to start over with a new name, get the .com as it's paramount etc. but we made the best of it and grabbed the .biz

No need to worry about that, there are plenty virus/trojan scans. Everyone can do scans before they launch it.