There is a
Vulnerability Disclosure that you can read to get the full details on how it was discovered.
Where did you download the patches from?
Yes, the process you listed is perfectly fine. You don't need the RCM jig and other stuff for updating your firmware the way you wrote.
And you can't click on the Disabled emuMMC option to re-enable emuMMC?
I have heard they are sold on AliExpress and eBay.
You made an emuMMC partition? If so, removing it means you risk getting banned online since that means all of your CFW & homebrew will be loaded directly onto your console. If you're fine with that, you can remove the partition with any partition manager such as AOMEI Partition Assistant Standard
Atmosphere should be compatible with all firmware versions. If it is not, notify the team immediately.
Daybreak is a homebrew application that installs firmware files on your SD card meaning it doesn't download them itself. Firmware files are copyrighted material however so we cannot help or link you where to find them but they are available to download illegally from certain places on the Internet.
Once your console is hacked, you will always be at risk for being banned.
However you can delay that from happening by using apps like 90DNS to setup a self-imposed temporary ban. This will allow you to use utilities like FTP without worrying about a ban. Alternatively, you can transfer files via USB using Hekate.
Atmosphere does not support mounting .XCI files like SX OS. You will have to install them like .NSP files
In order to use both, you will need to setup at least one emuMMC whether it is as a partition or file. Then you will have to decide whether you want to use Atmosphere or SX OS on the emuMMC or sysMMC.