Yes, MM is included with AP. If you talk to the CM about it they might be able to give you a credit on a gift card or something, but I don’t think they’ll refund it outright.
Yes, I was able to use my gift card to upgrade with no issues at all.
Go to guest services at the International Gateway entrance for Epcot. There won’t be much of a line - incredibly convenient from Beach Club. We were going to Epcot to start our trip anyway, but even if going elsewhere, I’d likely just walk up there from BC to activate and then walk back…