Sounds fine to me. Remember that the copyright notice must remain in the source code, regardless of who owns/maintains the website, so your client should be aware of that.
Correct. The code, as available on Dynamic Drive, is owned by Dynamic Drive. Anything else (code you might add/modify, images, etc.) is yours. Just keep the copyright notice for the DD part of the code. Admittedly if you make a lot of changes it could be a little hard to sort out who owns what, but that doesn't change the legal rights at all. In most cases it won't be that complicated anyway. Especially with something like script vs. images, that's clear.
If a script I use links and uses an image that I created, such as a marquee script, I still hold the copyright to the image right? Only the script is copyrighted by Dynamic Drive correct?