Not familiar with the 777, but to answer the other two;
hat is the difference between selecting FL CH as opposed to selecting a new altitude setting and unselecting VNAV on the MCP
If you want to descend/climb you need to be in a mode that will achieve that. FL CH or LVL CH will do that. So will VNAV, when certain criteria are met. Another mode that will do it is V/S. However, you can't just unselect VNAV and make it do it without engaging a mode that will!
what is the difference between an aircraft flying with VNAV & LNAV engaged with a.) AP engaged and b.) AP disconnected?
In the first scenario the autopilot will follow the VNAV path and the LNAV track, in the second the pilot will have to do it using the control column. If you still have the Flight Director(s) switched on they will give you guidance to follow, or if turned off it will be up to you to use the instruments to achieve the desired parameters.
Hope this helps.
PP