Setting up SoftPABX Please Help

We have Asterisk 1.2 and using 4E1 digium.

We just want to know if what is the best setup we can integrate with our system.

a. What is the best protocol to use?
b. Is asterisk capable of h323, sip and IAX at the same time?
c. What will be the best codec to use in order to have best quality?
d. If we will use h323. sip and IAX? What will be the best codec to use to have a good bandwidth consumption?

In my opinion, IAX2 is good for trunking and SIP good for the endpoints. But SIP is fine for everything as well. I would avoid H.323 if you can, just a poor protocol in terms of firewalls, etc.

Yes.

Full bandwidth would be G711 (alaw/ulaw). But if bandwidth is a priority than either gsm or G729 (there is a license of $10/resource).

Gsm or G729, could also consider Speex.