You have to turn it manually, which is the main reason I bought this unit. In my experience, similar units that "auto-lock" are problematic in that the "bolt" may not set correctly if not perfectly lined up. On our door, we had problems with humidity and the "auto" feature would jam unless you "jiggled" the door. Also, the "auto" lock units eat up the battery much faster.
#2 Is there any lockout value in case someone is attempting to guess the password? Such as stop functioning for a minute after 3 unsuccessful attempts?
Yes. After 4 unsuccessful attempts, the keypad light turns red and you can no longer enter a code for about a minute or 2
#3 There is a keyhole on the outer side of the lock, what is it for?
It comes with 2 keys as a back up. If for some reason battery is not working, the lock can be opened manually. I chose this because the battery is not used to actually pull the lock in and out so it should last longer than the fully automatic locks.