Easiest use CWM recovery or TWRP recovery. Install these first than just boot to recovery mode n select these files to flash. Google at N7 XDA thread how to install these
Flash tool is for Sony devices only

Go to your goo manager & download gapps from there....

if you are updating from carbon rom itself, your installed apps wont get wipe out. unless you specifically perform a factory reset. in which everything will be wipe clean except for internal storage.

you dont have to download their updates everyday, what i do is i update twice a week or maybe even once a week.

I don't think you can flash back stock ROM by using TWRP. You need either toolkit or Android SDK in order to flash back to stock ROM. Flashing stock ROM does bring your unit back to original mode, you will lost root by doing this, relocking bootloader is not necessary/recommended if you plan to root or do modifications later because next time you unlock your bootloader, it will wipe all your data again.

In order to get OTA update from Google, you need stock ROM, stock recovery(some people claim that they can still install OTA update even though they have custom recovery installed but it is just for minor update i.e. small version bump or patch etc), stock kernel and unmodified system.

Use toolkit(download link in first page) to flash back to stock ROM easily. You do not need to have a locked bootloader to receive update btw.

This is a known issue, Asus is using cheap digital volume control.
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