:

1. Can this bi-directional setup be done with one cable? My research
tells me yes, but I need it confirmed?

You need four wires. Whether they are inside one cable or not does not
really matter.

3. Sounds like I need to use a optical isolater, like :
http://www.navstore.com/detail.aspx?ID=1724 coupled with a USB to
RS232 convert?

In fact, there are direct usb-nmea interfaces, like

http://www.actisense.com/HTML/Products/Gateways/USB to NMEA 0183 Gateway/index.php

from the same brand.