This is something you con do yourselves, but I'm going to suggest you take it to the train store and ask them to show you how. The reason is that each locomotive is a little different. They come apart differently, they use different materials, and so forth.
The basic concept is fairly simple. Remove the locomotive shell. Clean out any dirt with a can of compressed air is often handy for this, though in some cases a solvent may be desirable. This is where things can get hairy; because you want to dissolve unwanted dirt or corrosion and leave the locomotive parts intact.
Once the moving parts are cleaned, they are lubricated. Light oil is usually used, but that can be bad for plastics. A 40-year-old locomotive is unlikely to have a lot of plastic in the running gear, but they might have some. They were just starting to make worm gears out of plastic then. There are some modern lubricants that are specifically made for use with plastic.
So, that's why I'm suggesting, you have the train store demonstrate the cleaning/maintenance procedure to you. Also remember to purchase the correct lubricants from it. I advocate establishing a good working relationship with a good train store, if you really want to enjoy the hobby.
Yes, you can use G scale models/tracks indoors and out. 8'x8' is not a lot of room for G scale, but you should be able to get an oval, or maybe a bent oval with a couple of sidings or spurs and still be able to move around the room. Remember that you may need access to re-rail cars and locos on occasion.
I personally have little use for a simulator except as a toy or surrogate for actually building a layout and running trains. By all means get one if you want to, but careful thought, planning and imagination will do just as well for much less money. I think the intellectual effort multiplies the satisfaction of accomplishing a layout design. I also will readily admit to old school tendencies.
There are several different 'G' Scale manufacturers, but each uses a little bit different scale ratios. LGB uses 1:22.1; Aristocrat seems to run about 1:28. Bachmann used to run about 1:24. There may be others. But, what I'm leading up to is that trains made up of pieces from different manufacturers may not look quite right. Now that doesn't mean that you can't purchase from more than one manufacturer, but watch how you interchange cars if you care about the way they look together. If you just want to run trains and don't particularly care about looks, which is OK, then don't sweat it.
If someone else objects, then don't let them play with your trains. As far as recommending one brand over another, I would suggest that you go shopping for a locomotive or a starter set. Find one that looks good and is a price that you can afford and buy it. If you want more cars, buy them; make sure that they are made by the same company. If you don't have a starter set or even if you do and you want to build a big layout, you'll need to buy track and a power supply.
The power supply that comes with a starter set won't be strong enough for a big layout, so you may want to purchase a bigger, better power supply. But you'll want to wait until you decide whether you want DCC before you make your final selection.
It depends upon how you will power and control your layout. In general, yes, some form of control for each train will be required. But whether you want or need it to be remote is largely up to you. One factor to keep in mind when building garden railroads is that while the rolling stock can be put away in inclement weather, the buildings and structures have to be able to stand up to wind, rain, possibly ice and snow, and ultraviolet radiation. Many people don't realize how destructive UV can be to plastics.
So, whether you are building with wood or plastic, everything will need some sort of protective barrier, paint, varnish, etc., or must be naturally weather resistant, such as cedar. When you buy a model train set make sure to ask if it can stand up to the weather in your area.