Thanks for the shout out Ryan!
Hi Angelos.
1. The short answer is yes, you should do all of those entries. Annoying right?
The best way to go about this is going to be writing a script to do the heavy lifting, but I am not cool enough to tell you how to do that. The idea would be to make one sitemap in one language, and if the URLs are identical except for the language code, then changing up everything for the next language and moving on one at a time.
You should have one main sitemap per language if you can get all of your content into one sitemap. Then have one sitemap index hosted at domain.com/sitemap.xml.
If that's not possible due to the sheer number of pages, do a sitemap index per language that references multiple sitemaps to cover the content in that one language. Then have another sitemap index that references the other indices per language.
2. See above. The main sitemap index should be at domain.com/sitemap.xml, BUT you can have each language sitemap hosted in each subfolder. Example: English sitemap at domain.com/en/sitemap.xml and Spanish sitemap at domain.com/es/sitemap.xml. This requires listing many sitemaps in the main robots.txt file or having a robots file for each subfolder. It's a lot more work than working with sitemap indices.
3. If you have claimed all language subfolders as independent sites in WMT, you can submit the corresponding sitemap. You don't have to put the sitemaps in the subfolders to do this though, you can still use the indices. You also don't have to submit them all individually, but you can and I would as I would want to see the index information in each corresponding account. That's just me though.
Does that all help?