Happiny, the play house Pokemon evolves into Chansey when max happiness and holding the oval stone. Must be leveled up when both requirements have been met.
Nope. You give it to Team Rocket. XD ...Actually, yes, but you have to give it to her as a hold item rather than using it.
yes. let it hold it. not use it.
Any time you feel like it, but make sure to give it to her as a hold item.