FOSC is Frequency of OSCillator, so if you are using 32MHz internal osc, your fosc is 32MHz if you are using 8MHz external osc then your fosc is 8 MHz and if you are using 4 MHz external with PLL then your FOSC is 16MHz.
011 and 111 settings are for an internal dedicated oscillator with 1.6us period if I remember correct...
You can always use fosc/2 timing since faster is generally better. But again, it depends on your timing need. If you don't need a special timing, just choose whatever you like.
Edit: I'm not sure minimum conversion time but I believe it has to be larger then 10us
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