You can type direct to the MDI line, you can use MDI and the teach file as well. You can use the wizards to produce code and also you can just write some code into a text file (best to change it to .tap extension) and then load that.
Yes you can simulate no problem. You will have to enable the axis you intend your code to use, there is no need to put in the correct port or pins at this stage. One other thing you will have to do is change the E-Stop active state, this is because with nothing connected Mach will think the E-Stop circuit has been broken and wont allow you to do anything. All of these are done from Config menu then Ports and Pins
Hood