For #1, I think the only way to change between extract and live is via desktop. Uncheck the "use extract" and then republish.
For #2, yes. Some data providers can be live and some can be extracts
As a side note, are you sure that you want to have such a large workbook? There may be better ways of doing this...
Jeff, thank you so much for that answer. Finally, an answer that I can understand! LOL
So, once we create the needed connection on the server, the workbook will just use that connection? Once we publish the workbook, do we need to do anything to it to make it use that connection?
I'm sure there are simpler ways to do this, but we've been in a hurry to get this workbook completed, and haven't really had time to make sure everything is just right. :-)
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the workbook can have the connection(s) embedded locally (which is the default), or you can publish the datasource as standalone to TS decoupled from the workbook, and then the workbook just points at the connection via the datasource that is stored on TS, you do this by way of making connecting to Tableau Server. One of the big benefits of this is that then you can have many workbooks that point at the published datasource that lives on server. I hope this helps and doesn't muddy the waters too much. There's also many posts if you google "Tableau published datasources".