I live about 1/2 hr south of Siesta, but I grew up about 5 minutes from there, so I am very familiar w/ the area. I'll do my best to answer these questions. Growing up in the area, I know more about landmarks on the key than actual streets, hotels, etc. It's easy for me to get somewhere, but harder for me to tell somebody how to get there! You know what I mean? But here it goes:
1) I have read that both Siesta Beach and Crescent Beach are gorgeous (although Siesta Beach has more amenities). Are both beaches equally beautiful? (We want to enjoy the quartz-white sand and crystal-clear water.)
I look at Siesta Key as only having one beach, Siesta Beach, b/c it is the most popular and the most beautiful. Crescent Beach is actually a part of Siesta Beach, just a little stroll to the south. (It gets it's name by the shape of that part of the beach.) Yes, the sand is bright white, powdery, and gets VERY hot - so make sure you wear shoes! The beach itself is also very big, so it is a little bit of a walk down to the water. Siesta has a playground, pavilions, grills, concession area, bathrooms, showers, etc. There is also Turtle Beach that is a little farther south of Siesta Beach, but you would have to drive there. It's not as busy, but not as pretty either! Here is a website that may help : http://www.bestbeaches.org/crescentbeach/
2) We would like to find a very inexpensive hotel. I assume the cheaper hotels are further from the beaches? Is it unrealistic to find a bare-bones hotel for around $50-60/night on Siesta Key? Is it feasible to stay on the mainland, or would it be too much of a pain to find parking at Siesta/Crescent Beach (even if we get there by 8AM or so)? What about finding parking at Siesta Village in the evening? (We would have to go back to our further-away hotel to shower/change, and then drive back to Siesta Village in the evening.)
Most places to stay on Siesta are rentals or condos. Since you are going in May, it probably won't be as expensive as it is now, simply b/c Spring Break is over and summer hasn't begun yet. The snowbirds (aka northerners) should mostly be gone for the season. However, you may be better off staying on the mainland. I know there is a hotel just back over the Stickney Pt Bridge, but I'm not sure what it is called. I think it is like a Hampton Inn or something. You may be able to find something on the Key though. Almost all the hotels/motels on the Key are privately owned and are not a chain. They have a small, quaint, old-Florida style feel to them. If you do stay by the beach, you could walk pretty much everywhere along the beach and in the village (it's a lot of walking, but definitely doable). Just do a search on google for Siesta Key hotels and you'll find plenty. Tropical Shores Beach Resort had some pretty good internet rates (~$84/nt) and it is a nice little beach motel at the south end of Siesta. This is just an example though, b/c there are a ton of other places like this on the Key. I'll address parking in question #4 b/c that's a novel in itself 
3) As far as evening entertainment (shops, inexpensive restaurants/food kiosks/sandwich places, walking around and enjoying the atmosphere), is Siesta Village the place for this? Or are there other areas of Siesta Key?
Siesta Village is definitely the place to be in the evenings (or even the afternoons!). For dining, there is The Broken Egg (wonderful for breakfast and a favorite among the locals), The Dacquiri Deck (the name says it all!), Siesta Key Oyster Bar, Old Salty Dog, Big Olaf Ice Cream (I swear this place is always packed!). Gilligan's is a bar that goes until all hours of the night. The Beach Club has drinks and dancing. Napoli's for pizza and there are little markets if you want to pick up some stuff for a sunset picnic on the beach. 
Of course there are a ton of little restaurants, but I think these are the most popular.
4) Is the parking at Siesta Beach and Crescent Beach free? Is the parking at Siesta Village free?
Yes the parking in the Siesta Key Beach lot is free. However, the lot fills up VERY quickly. There have actually been several articles recently in our paper about expanding the parking lot. I think the lot hold a little over 800 cars, but during busy times, the lot can fill up by 10:00 am or so. If the lot is full, you may end up driving around for an hour or two searching for a spot. As far as parking elsewhere on Siesta Key, be careful. A lot of parking spaces are reserved for businesses, restaurants, hotels, etc. and you WILL get towed. Here is a little snippet of info from our paper regarding parking tips:
If the lot and beach access parking are full, drop off your passengers and try to get to the beach one of two other ways:
--Cough up $10 and park in the St. Boniface lot nearby on Higel Avenue.
--Go back to the mainland and catch a bus back to the beach. On Saturday the Route 11 bus, or on Sunday the Route 1411 bus, take a little over 10 minutes to get from Westfield Southgate Mall on Tamiami Trail to Siesta Key Beach.
The name of the public bus is SCAT and a lot of people use it. It's very easy to pick up a bus for the Key. Just visit their website and get times, info, etc. I think you can probably pick up a bus on the mainland for travel over the Stickney Pt Bridge (south end of Siesta). The one mentioned above that leaves from the mall (very nice mall, BTW) travels over the north bridge that goes to Siesta.
If you are heading to the Village in the evening, parking can be either easy or tough. But you can park at the north end of the main beach lot or on any of the small beach access lots at the north end and walk into the Village. Just make sure if you are parking in the Village that you obey any No Parking signs!
5) Will traffic be terrible driving from Siesta Key to Port Canaveral on the afternoon of Friday, 5/8? What time to you recommend leaving Siesta Key to travel to Port Canaveral? (I'm not sure how Friday afternoon traffic is in the area.)
Traffic can be good or bad on the way to Pt Canaveral. Leaving from the Key to Pt Canaveral will probably take about 3 to 3-1/2 hrs in moderate traffic. From the Key to the interstate can take about 15-30 minutes depending on the time of day. From Sarasota to Tampa is an hour, Tampa to Orlando is an hour and Orlando to Pt Canaveral is another hour. I-75 traffic is usually pretty good and moves along. I-4 can be a nightmare though, especially at the I-75 junction. Of course, Friday traffic will be busy since it's Friday and I would avoid rush hour. I would either leave around 1:00pm or after 6:00 pm. Or you can stay until Saturday morning and leave early when traffic will be pretty much nonexistent. (I would leave Friday though just to be safe!) If you are arriving on Thursday I would probably leave Friday evening. That way you can get a full couple days at the beach and enjoy your time. Siesta is a very laid-back place. You don't find people scurrying around trying to do everything in one day. It's very much the relaxed beach lifestyle there!
I hope this helps! If you have any more questions feel free to ask or PM me. Have fun!
That's a long way out though!
