re start at level 1 in nightmare or wutever its called?
and then is elite after that?
and do you restart in elite too?
can u use items from norm in elite?

1- No, you start NM at the level you left Norm with, and you can go back to normal by clicking the new thingie that appeared in your character selection screen.
2- Nah, Elite is available right after beating norm
3-In Elite you have to make a char from scratch, but it's completely worth it
4-No. Norm items = Norm items, Leet items = 1337 mode only. You can, however, use norm items on your NM char, and Elite items on your Elite NM char. You get the picture!
Just think of it like this:
Elite mode = ladder mode in D2
Norm = NL
NM = NM and Hell difficulties in D2.
Hope this is easier to understand.

ok so, i should rush thru the game on norm cuz i wanna play elite.
Once i beat the game on norm i will be able to create an elite guy.
from there I will have to beat the game AGAIN on elite norm to get to elite nm, correct?
is elite nm where everyone plays?

well thats all true, but when you asked if elite nm is where everyone plays, elite is elite, and you can log in in nm or non nm mode whenever you want on your elite guy after you beat the game. nm is just harder / better drops. so elite is where everyone is at ( and i dont suggest rushing through the game, but only do the main quests. its a good storyline and itll help you get the hang of it =)