Some help/suggestions needed in relation to SEO keyword research

I think I am lacking something when I finalise the keywords for my projects. I need to understand 'keywords selection' when starting work on any SEO (mostly local) project; considering I can use only free tools and haven't had much luck with these.

1> Difference between keywords when shortlisting & finalising for SEO and for Google Adwords.

2> Google Keyword Planner in Google Adwords. Is it still valuable and holds practical value when searching for keywords for an SEO project, not Adwords?

3> How to search for and finalise the keywords for SEO when giving top priority to the traffic, rankings taking second place?

Thanks to all who will attempt to help me out with good, practical keywords research.