1. Asbesto siding generally shoud not be a big concern.

As far as they are in good condition (not crumbling). A*****estos insulation, if exposed, is more troublesome. Old houses that have these usually have already had the material wrapped up so that will be ok. If not, then I suggest you to find another house.

Short sales are subject to bank approval, so it is not always cheap. Very often you will find a house on short sale failed to sell(because of the stupidity of the bank), then come back to market after a number of months at an auction or as REO. You are more likely to get a better deal then.