A) An instantaneous spell never suffers a penalty for being cast in the snap phase. On the Spell Casting Modifications Table (T-4.6), the -20 penalty only applies to a non-instantaneous spell cast in the snap phase.
A.1) The entry from T-4.6 is the normal snap action penalty; the penalty is -20, not a cumulative -40.
B) I know of nothing in the rules that would require this.
C). My understanding is that in order to cast an instantaneous spell, you must have declared it as an action. As you noted, many instantaneous spells are defensive (many buffs are also instantaneous, though). This creates a defensive quandary that leaves the mage at a distinct disadvantage. If his opponent is casting a bolt spell, then spell-bending is a good defense. If his opponent throws a spear, then deflections is a better spell. So, I agree that nothing in the rules supports "reactions."
Moreover, this is starting to become an issue in my game as players become frustrated by the weaknesses of (defensive) instantaneous spells. So, I'm thinking of allowing instantaneous spells to be declared at the beginning of the round as a placeholder. E.g., in the snap phase, I plan to cast an instantaneous spell. Once you reach the instantaneous spell-casting in the initiative sequence, a reaction has been primed. From that point, until the end of the round, the character can decide which instantaneous spell he's going to cast.
The spell-caster still pays for this defensive opportunity: the instantaneous spell declaration counts against the limit of 3 actions in one round, 10% activity roots the caster in place if he's preparing another spell, and an instantaneous spell cannot be declared in any round that another spell is cast. If we assume that an instantaneous spell cannot be used when an action is canceled, then the character cannot even cancel a regular spell to cast an instantaneous spell instead.
In short, the RAW are fuzzy on this matter, so you may need to improvise a bit.
D) Concentration requires 50% activity. If you're using SoHK, then it also requires 1 exhaustion point per minute. If you're using Mentalism Companion, then there is a cap on the number of rounds you can concentrate. (If you're using both, I would recommend an OR combination: Either spend 1 exhaustion point per minute OR use the Spell Concentration skill. I leave that decision up to the player on a case-by-case basis.)
Mentalism Companion also contains information regarding maintaining concentration in the phase of distractions. Without Mentalism Companion's rules, a character should be able to maintain concentration as long as he is able to maintain 50% activity. Although it's not explicit, one could interpret the penalties associated with maneuvers performed while forced-to-parry (-50), stunned (-70), and stunned-no-parry (-90), as resulting from reduced activity. I.e., you can (just barely) maintain concentration when forced-to-parry, but not if stunned.