If a talent says upgrade the ability of the next skill check by 1, dies this mean 1 green die is coverted to a yellow die?

Yes.

Yes, unless your pool has no more green dice. If that is the case, add a green die instead.

Increase is add a green or purple die. Upgrade is turn a green or purple die yellow or red respectively unless you are out of green or purple die then you add a green or purple die.