The goal keeper (may be known as a goalie or keeper) is allowed to touch the ball with his hands and to pick up the ball as long as he is within the 18 yard box (also known as the penalty area).
Other players may only handle the ball when it is out of play. This is usually either when the ball goes outside the bounds of the field, such as for a throw-in, goal kick or corner or when the referee has blown his whistle to indicate a foul or to indicate the end of a half.
Note that during a goal kick, corner or free kick / penalty the player may initially position the ball with his hands, however once the referee blows his whistle to recommence play, the ball must only be played with the feet.
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No, that's called a handling. The handling rule includes anywhere from the fingertips to the shoulder. The touch must be intentional and is totally up to the discretion of the refereed. A ball that inadvertently touches a players hand or arm from a kick or bounce is usually not called. When a "handling" infraction occurs the opposing team receives possession of the ball via an indirect kick at the point of infraction.
The only player allowed to "handle" the ball is the goal keeper and only when he is inside his own penalty area. He may NOT, however, "handle" the ball if it is intentionally kicked to him by one of his own team or if he steps outside the penalty area.
Any other player may touch the ball with their hands if the ball goes out of bounds (into "touch") over the sideline (touch line) in which a throw-in occurs. Other players may also touch the ball with their hands to place the ball for goal kicks, corner kicks, direct kicks, and indirect kicks.
Players other than the goalkeepers are not allowed to touch the ball with their hands while it is in play. The goalkeepers may handle the ball only within their own penalty areas. Players may (and sometimes must) touch the ball with their hands prior to (or while) putting the ball back in play, but the ball is not yet in play at these times.
You may deliberately handle the ball if you are a goal keeper in their own penalty area or to restart the match if the ball goes out of play.
It must be deliberate handling and is a direct free kick.
In order to be a penalty it must be done by a defender (not the goal keeper) in the defender's penalty area.