UFE for noobz

Hi and welcome!

1: Yes, you can use your own 3D models (that's kind of the point ).  If the character is rigged with a standard FK rig (*), then it should be Mecanim compatible (generally, you'll want Mecanim over Legacy animation system).  From there, following the tutorial on hitbox and character setup would be all you need to do.

* I'm not sure if IK is supported, but I think it might be.

2: You can use only UFE animations if you want.  But there's only 1-2 character's worth of moves included.  Also, 1 character included is Legacy system, so you might not even be able to use those moves (if your character's rig isn't the exact same rig).  Adding in your own animations at anytime isn't a problem, and of course they can co-exist with the default animations.

I recommend getting up to speed on Unity basics and importing a 3D model to use in a standard game.  There are many tutorials on the Unity website showing the workflow for getting 3D rigged characters into a game and working.  The import process for UFE is pretty much exactly the same (probably even easier actually), but understanding this fundamental step will help greatly when you're making your game.

having some issues, with my model in the scene view, and him only having one arm
and remaining black and white, the colored texture isn't being applied to the model?

when attempting to play game i get:

object reference not set to an instance of an object?

OK, first thing.  Have you tried playing the game without your character?  Just to confirm the default UFE setup is working for you.

For adding your own characters, have you gone through some Unity tutorials yet?  If so, have you seen the hitboxes setup video on our video tutorials page?

Are you missing any characters in Global Options | Characters?

I would suggest a complete reinstall of UFE to make sure everything is set up right.  Start the game without changing anything to check it's all OK, and then you can start working on adding your character in...

But before that even, I'd start an empty Unity project and just import your character correctly to make sure that works.  Missing an arm and not having textures is a problem regardless of UFE, so it's worth sorting that out before continuing. 

What 3D software package is your character created in?  Generally there's no problems with 3DS Max, Maya or Blender.  Other packages should work, as long as you can export into an FBX file and the model meets the normal requirements for game development.

i only have one character, and that is demo character