From my house building days.....

It is not necessary to prime the back of the wood siding. However, you
could sure do yourself a favor by priming the front. It doesn't have
to be Kilz, you can use any number of primers, or just use the paint
your are going to use for final coats.

If you aren't using a nail gun, use 8d galvanized finish to install.
About 6 nails at the top and bottom, and about 8 nails on the vertical
field studs and 10 nails on the vertical lap joints.

After caulking/filling all the nail holes, you only caulk the seams as
needed. Then a heavy prime coat, then two heavy finish coats. Plan on
painting again in the next 5 - 7 years, depending on your weather.
Then you should be able to power wash and apply a couple of coats of
paint and be good for another 10.

The bottom edges receive no special treatment. I always put a coat of
paint on the raw edge if I could, though. You don't need flashing on
the bottom. You only need flashing if you are stacking one course of
siding on another, then use a "Z" style flashing made just for this
application.

Tyvek is put on the outside of the studs, before siding. It is made to
wrap the house, not close off the inside.

Robert