Should I plug the vac hose on the Digi ( for #6) while I am doing that ?
There's no need to plug an unused channel (vac hose) on the Digi Sync while you're using it.
Also those white twist cacs that came with my kit.....What are they for?

They can be used to plug the short hoses on the Digi Sync while it's in storage. Since you may store it out in the open in your shop or garage junk, dust, crud and just plain stuff may fall into the open ends and eventually plug up the ports deep down inside those short hoses. If you have a storage tub then there's no need to worry about it.
Could always route the petcock hose to #5 after 5 is done.
Yes you can but it's probably less hassle and confusing to just leave #5 on there and attach #6. You don't want to forget to cap off #5 while doing that either.
This?
I did that years ago. It's a combination of red and amber LED's in each velocity stack. Each led is self-blinking. I've never had a problem with them even through many bike washes, rain storms and intense heat. It was a lot, lot, lot of labor that I don't care to repeat. However, I have been thinking about upgrading it to follow the engine rpm. But, so far I haven't found the time!