How is lost foam casting expanded polystyrene foam made?

Yes it is.

foam is a substance that is formed by trapping many gaseous bubbles in a liquid or solid.A foam is normally an extremely complex system consisting of polydisperse gas bubbles separated by draining...

You could dry it with a towel, I suppose. A little water is not going to hurt styrofoam much, so you could also just let it dry on its own.

It wasnt, it was invented after the 1990's

There is a whole science involved in this but it is basically a 2 component system. 1 side is MDI (Methyl DiPhenylene DiIsocyanate) and the other component is a mixture of polyols (one of which can...