...how far away from the instruments would you recommend?
I suppose it a matter or trial & error. My camera is High Def so from that distance on the tripod, the digital readouts are fairly readable. I suppose your instructor will have something to say about where you put the camera!
Perhaps the most important thing is to get the exposure right, consumer video cameras are terrible this. Unless you are lucky with the sun behind you, or its a very dull day, you will find that either the interior is too dark, or the exterior is too bright. The only way around that is to separately light the interior which is obviously overkill.
Sound? You need to have an external mike socket on the camera from which you plug into the pax headphone socket, or use a Y-splitter plug from either the pilot or copilot headphone sockets. Another way is to use a separate sound recorder like an Mp3 recorder.