1. With ICWO Is a pass action considerd an action in which you can up someones stat? If not please let me know where to find this as I have had a friend argue that he could do this.

2. Can I us ICWO to up a characters defense and use long range expert at the same time?

3. At what point can I give the +1 with ICWO? it does not specify.

1. NO you can't but I don't know where to prove it.

2. Yes

3. At any time as long as you do an action with that character.

From the Icons Rule Book (page 16):
There are four kinds of actions you may give a character.
• Power actions
• Free actions
• Move actions
• Combat actions (close combat or ranged combat)

From the DC FAQ:
Free actions may not be used to give an Agent the +1 to its combat values.

As you can see, there are only four types of actions, and Free Actions do not count towards using ICWO. This leaves you with three ICWO-able actions, and 'Pass' is not one of them. A pass is not an action, period. It is an absence of an action.

I assume you mean Ranged Combat Expert (RCE)? If so, then yes. You don't need to use the +1 from ICWO on Attack or Damage Values. Defense Value is a perfectly legitimate combat value to increase.

From the DC FAQ:
The +1 to combat values that Agents gain is applied immediately when the action is given.