Borel's lengthy 1953 Annals paper is essentially his 1952 Paris thesis. It was followed by work of Bott, Samelson, Kostant, and others, which eventually answers your side question affirmatively. For a readable modern account in the setting of complex algebraic groups rather than compact groups, try to locate a copy of the lecture notes: MR649068 (83h:14045) 14M15 (14D25 20F38 57N99 57T15) Hiller, Howard, Geometry of Coxeter groups. Research Notes in Mathematics, 54. Pitman (Advanced Publishing Program), Boston, Mass.-London, 1982. iv+213 pp. ISBN 0-273-08517-4. (This was based on his 1980 course at Yale. Eventually he left mathematics to work for Citibank.) The identification of the cohomology ring with the coinvariant algebra of the Weyl group has continued to be important for algebraic and geometric questions, for instance in the work of Beilinson-Ginzburg-Soergel. While Hiller's notes are not entirely self-contained, they are helpfully written. (But note that his short treatment of Coxeter groups has a major logical gap.)
ADDED: In Hiller's notes, Chapter III (Geometry of Grassmannians) is most relevant. For connections with Lie algebra cohomology, the classical paper is: MR0142697 (26 #266) 22.60 (17.30) Kostant, Bertram, Lie algebra cohomology and generalized Schubert cells. Ann. of Math. (2) 77 1963 72–144. Nothing in this rich circle of ideas can be made quick and easy; a lot depends on what you already know.
P.S. Keep in mind that Hiller tends to give explicit details just for the general linear group and grassmannians, but he also points out how the main results work in general, with references. I don't know a more modern textbook reference for this relatively old work. But the intuitive connection between the Borel picture and the Bott/Kostant cohomology picture is roughly this: The Lie subalgebra spanned by negative root vectors plays the role of tangent space to the flag manifold/variety. In the Lie algebra cohomology approach you get an explicit graded picture for each degree in terms of number of elements in the Weyl group of a fixed length, whereas the Borel description in terms of Weyl group coinvariants makes the algebra structure of cohomology more transparent. (What I don't know is whether a simpler proof of Borel's theorem can be derived using Lie algebra cohomology.)
Concerning the relationship between $K/T$ and $G/B$, this goes back to the
work around 1950 on topology of Lie groups (Iwasawa, Bott, Samelson): all the
topology of a connected, simply connected Lie group comes from a maximal compact subgroup. So the two versions of the flag manifold are homeomorphic.
In later times, emphasis has often shifted to treating $G$ as a complex algebraic group, so that $G/B$ is a projective variety. For me the literature is hard to compactify.
One more reference, which treats the Borel theorem in a semi-expository style: MR1365844 (96j:57051) 57T10 Reeder, Mark (1-OK), On the cohomology of compact Lie groups. Enseign. Math. (2) 41 (1995), no. 3-4, 181–200.
