1. What is the difference between gas operated and blow back? See attachment.
In the case of 223/556 ARs, you don't have to worry about this. It'll either be a DI vs Piston, long story short on that one, personal preference (I prefer DI). But since you wanted to know, gas operated=uses the gases from the round to help cycle the action instead of newton's 3rd law in the case of blow back (generally blow backs are for handgun rounds or rimfires). The reason why you see blow back as an option is for the M&P15 22 which fires the 22lr.

2. Are the front sights adjustable? I was concerned can not see out of a scope because of the front sights.
Yup, you'll just need a tool found just about anywhere to adjust the front sight post.

3. What ammo do you recommend for target shooting?
Cheapest you can find that your rifle will shoot (which should be all)

4. What are first thing you recommend I do when i first purchase the gun?
Shoot it.. A LOT.. Once you shoot it enough and become familiar enough with it, you'll find what you want to change without having to ask should I change this or that.. It might just be which do I want between the brands/models on that particular thing you want to change..

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Isaiah 43:1-3