You had it right until that part. No, no, no! The engine will sit behind the driver, not the car. Damn near most high performance exotic cars (not to mention open-wheel racers *choo, choo* and Le Mans prototypes) are mid-engine. The engine sits in between the two wheel axles giving the car a much better front-rear weight distribution. When the weight of the engine is put towards the center of the car, the center of gravity is closer to the axis of rotation and the car's moment of inertia is reduced. This gives the advantage of making it easier and quicker to turn. Rear-engine cars are notoriously prone to oversteer. Porsche has only been able mitigate the effects on their own RR cars through their continual suspension tuning.
You're right, thank you for correcting me. I was oversimplifying my example for informational purposes, probably to a fault. I'm no gear head by any means, so my crass vocabulary regarding front/mid/rear-engine vehicles leaves something to be desired. I just enjoy the physics of it all. But, yes, a car with the engine in the trunk, literally over the rear axle, would likely handle horrendously. Luckily actual rear engine cars are hard to come by in Forza 4 (although there is the DeLorean, the only supercar as far as I'm concerned). The point, really, is that any kind of gross imbalances in the car at any point is going to lead to handling issues.
I think figuring out how to balance a car and how to prevent skidding while maintaining maximum speed is the only way to improve time. The things you describe are finer points to be perfected after the fact. There's no point in memorizing a course if you can't keep the ass end from swinging out every time you take a turn. Maintaining control is something you need to nail down first, especially if you're afraid to drive anything other than front engine, front wheel drive cars.
I agree with turning off auto-braking, and auto-steering. If you're not comfortable with braking distances and driving lines, it's ok to turn on the visual driving line for a time to get a feel for those things; just don't build all your skill off of relying on it because the ultimate goal is to be able to turn it off. Use it to learn what and where an apex is, and where to brake and accelerate around it.
I believe that stopping a car is damn near impossible without ABS and starting the faster cars without traction control also requires an enormous amount of skill. I'll let you and peer pressure determine whether you should have those on. Stability control, however, seems detrimental if you want to learn how to drive something other than a front engine, FWD car.
Late braking, like @keris was talking about, is also a fairly easy but important concept to grasp. The point is you want to spend as little time braking and as much time accelerating as possible while still keeping the car under control.
Now these physics-based, procedural ways of thinking about your driving may or may not work for you. If rote memorization is your thing, then turn off the driving line, run the time trials by yourself, and memorize courses and landmarks. Different strokes for different folks.
As a side note, that link to the GT2 manual is a phenomenal resource.