Q1a: Is the master key password created per DB instance?
A1a: Assuming the question really means "Is the master key created per DB?"" then answer is Yes. Each DB has an different master key. there is also a thing called the service master key, which is per SQL Server instance.
Q1b: When I backup that DB (.bak) will I be able to restore the DB to
another Server2?
A1b: Yes. The master key in the restored database can be open using the original password. Then the Server2 service master key encryption can be added to the restored DB master key.
Q2: Do I need to backup the certificate, master key or symmetric key
if I want to restore to another server?
A2: No. All these objects are part of the database and they are restored along with the database. Specific needs to backup individual keys may arise from operational requirements (eg. key escrow).
Q3: When should the symmetric key be opened?
A3: Keys that require opening have to be opened in the session. Once opened, they stay open until explicitly closed or until the session disconnects. An 'open' key is 'open' only in the session that opened it.
Q4: Should I worry about who can open and close the symmetric key? ...
A4: Now this is the real question. You have two alternatives really, which correspond to two distinct scenarios:
Scenario A: when the service needs to access encrypted data without asking the user for passwords to the data. This is the vast majority of the cases. In this case the service needs to open the keys somehow. the solution is that the SQL Server uses the service master key to encrypt the database master key and the database master key is used to encrypt the certificate's private key and the private key is used to encrypt a symmetric key and the symmetric key encrypts the data. The SQL Server itself can reach any data following this chain, because it has access to the service master key. In this case the data is cryptographically protected only against accidental media loss: a lost laptop with the database on it, or an improperly disposed HDD with database of backup files on it etc. For all other threats, the data is not cryptographically protected, is only protected by the access control: since the SQL Server itself can decrypt the data w/o needing a password from the user, any user with sufficient privileges can access the data w/o knowing the password. In other words, a compromised ASP application may allow access to the encrypted data. As a note, scenarios in which the root of encryption is some secret stored on the ASP web application itself are just a (badly designed) variation on this and do not change anything.
Scenario B: when the service requires the user to provide a password. The password must come from the end user. In a web application, the user must type the password in a form in the browser, it gets sent over SSL channel to the ASP application, which passes it to the SQL Session (again on an SSL channel) and SQL can now decrypt the data using this password. This scenario is typical for multi-tenant applications in which tenants provide the data access password. In this scenarios the data is cryptographically secured against unauthorized access, because the SQL Server itself, nor the intermediate ASP web application, simply do not know the password. Even for a syadmin user with all privileges it would be impossible to read the data. Data can be moved at will and remains just as unscrutable, as it can be, again, only be read by the end-user that has knowledge of the password at the root of the encryption chain. Note that any 'shortcut' deviation in this scenario in which the password is 'saved' somewhere intermediately and not provided by the end-user this scenario degrades immediately to the first Scenario A.
A mandatory read for you: Encryption Hierarchy.
Best Answer
As a good practice, do not use sa as the log on from you application to the database. Create another user in the database and use that user to interact with the database. That user should have restricted permissions to only be able to access the database objects it needs. I also hope that the password you use is not password. These steps will make your database a little bit more secure from attack/accidental/malicious activity issues.
Profiler is showing the connections to the database based on the user account connecting to the database - that is the user account in the connection string. You could create database accounts for each user, and alter the connection string to use that user account to connect with. This may be a workable solution if you do not have many users. [It is also useful to do use separate users in conjunction with database permissions as a security/data integrity stratergy (ie user 'boss' has read/write privileges, user 'anonymous' has only read access to the data).]
If you can set up a cross-domain trust that would allow you to use Windows Authentication. The web app would then need to be configured to impersonate the user that's using it otherwise the web service account will be displayed.
Another option if you are using stored procedures is to add the user ID as an argument to the call to the stored procedures which should show up in the trace.
If you have a data access layer, you could add a routine that logs the user, action and time stamp of each database action. The timestamps should correlate with the profile if you still need to profile information.