The insulation is normally a blanket that gets wrapped around the liner and glued / taped in place, with a metal mesh "sock" that gets pulled over the liner & blanket to hold everything in place while you slide it into the chimney. Ideally the liner should be insulated from about the 1st flue tile up for best performance advantage. In any case you should definitely insulate the part that sticks out above the masonry. The insulation blanket is usually 1/2" thick, so it will be a bit of a squeeze to get it into a 7" pipe - 8" would be better, but you might get away with 7".
If the chimney is not already NFPA-211 compliant (tile lined, in good repair, built w/ proper clearances, etc) and the liner is being installed to make it comply, then the insulation is required by code. If the chimney is NFPA-211 compliant, and the liner is being used simply to meet cross section requirements, or for ease of cleaning, then the insulation isn't strictly required, but will probably improve your performance. The basic idea is that the hotter you keep the stack interior, the better it will draw, and the less creosote you are likely to build up.
In terms of the pipe you use for the extension, I don't know of any strict limitations on what material is used, however a lot of folks prefer to use stainless on exterior parts because it looks better for longer when exposed to the weather, and may last longer.
The hearth pad is another issue that is a bit more complex than appears at first glance - The first step is to look in the manual for the insert, and see what it says about requirements for the floor protector. Some units have minimal requirements, and will merely say something to the effect that they need a "non-combustible surface" and virtually anything that won't burn will meet the requirement. Other units will require some level of insulation, the "nice" manuals will say something like "hearthpad made from non-combustible materials with a minimum R-value of ???" The "PITA" manuals will say something like "hearthpad made from <thickness><material> or equivalent". The idea is that the hearth pad must not only withstand possible flaming logs and embers getting dropped on it, but must also prevent the heat radiated by the insert from overheating the combustibles under it. The value in the manual is a minimum requirement that has been determined by testing as part of the stove's certification process. It will never hurt to exceed the minimum.
IFF your manual says "non-combustible surface" the soapstone slab should be fine, however if an R-value is stated, it almost certainly won't be, as stone has negligible R-value. There is an article in the Wiki on hearth construction, with details, but essentially you need to build a "sandwich" of insulating materials to reach at least the required value, which is usually then covered with stone or tile for cosmetic sake.
Gooserider
If the chimney is not already NFPA-211 compliant (tile lined, in good repair, built w/ proper clearances, etc) and the liner is being installed to make it comply, then the insulation is required by code. If the chimney is NFPA-211 compliant, and the liner is being used simply to meet cross section requirements, or for ease of cleaning, then the insulation isn't strictly required, but will probably improve your performance. The basic idea is that the hotter you keep the stack interior, the better it will draw, and the less creosote you are likely to build up.
In terms of the pipe you use for the extension, I don't know of any strict limitations on what material is used, however a lot of folks prefer to use stainless on exterior parts because it looks better for longer when exposed to the weather, and may last longer.
The hearth pad is another issue that is a bit more complex than appears at first glance - The first step is to look in the manual for the insert, and see what it says about requirements for the floor protector. Some units have minimal requirements, and will merely say something to the effect that they need a "non-combustible surface" and virtually anything that won't burn will meet the requirement. Other units will require some level of insulation, the "nice" manuals will say something like "hearthpad made from non-combustible materials with a minimum R-value of ???" The "PITA" manuals will say something like "hearthpad made from <thickness><material> or equivalent". The idea is that the hearth pad must not only withstand possible flaming logs and embers getting dropped on it, but must also prevent the heat radiated by the insert from overheating the combustibles under it. The value in the manual is a minimum requirement that has been determined by testing as part of the stove's certification process. It will never hurt to exceed the minimum.
IFF your manual says "non-combustible surface" the soapstone slab should be fine, however if an R-value is stated, it almost certainly won't be, as stone has negligible R-value. There is an article in the Wiki on hearth construction, with details, but essentially you need to build a "sandwich" of insulating materials to reach at least the required value, which is usually then covered with stone or tile for cosmetic sake.
Gooserider