1. Regarding the mdw file, what folder do I put it in on the other machine?
You can put it anywhere as long as the shortcut is pointing to it, however , if it's on a Network you normally keep the MDW in the same folder as the back-end tables (so it gets backed up daily),
2. Suppose a collegue wanted to use the database, but I wanted to keep the same security structure. If I send along the mdw file, will it affect other databases my colleague creates or works with?
No, it won't affect other databases, he will need the three parts.
3. With the shortcut, do I use the Start In to direct it to the MDW file?
Here's a sample.
"C:\Program Files\Microsoft Office\OFFICE11\MSACCESS.EXE" /wrkgrp "C:\Documents and Settings\david\Desktop\Dyf61a\MIS.mdw" "C:\Documents and Settings\david\Desktop\Dyf61a\Dyflin1.mdb" /user SomeName /pwd Some Password
...it should be, Access Location, Workgroup Location, Database Location
...you can also add the user and password switches to the end of the shortcut, although it's not good practise to be storing your password in the shortcut, for obvious reasons.