Generally you would want to have vents along the eaves of the roof, then
vents at the peak of the roof and a clear path for the air to flow as
pictured on the following web page.

http://www.owenscorning.com/around/v...ofandattic.asp

So best to have this type of air flow and to not block that air flow with
insulation.

So far as the knob and tube wiring, I would have it all replaced with romex
if it is acceptable to cover the romex in your area with insulation, then
not to worry about that.

So far as the recessed lighting, no matter what the label says, these can
get *very* hot and damage/melt the insulation on the wiring. I would have
the electrician verify that these are wired with appropriate new high heat
rated wiring. Then I would also be sure to not cover them with any
insulation so the heat can dissipate.

So far as how much insulation, with the current high energy costs, I would
add as much insulation as possible to the attic and also add the roof top
insulation. It will probably be worth it in the long run. I don't know what
your heating and cooling costs are, but if you want to lower them, then
consider the cost of this work -vs- the cost of added insulation.

And so far as spray foam around the existing electrical boxes for ceiling
lighting, again these can get to be quite hot as heat travels up. I would
re-wire with appropriate new high heat wiring and ask the local building
inspector what is allowed. I have seen these where the heat from a regular
light bulb has caused the insulation on old wiring to fall to pieces
leaving bare wire (was not high heat rated wiring). Personally I would tend
to want to leave a little ventilation above these just like the recessed
lighting.

Overall, your area may require a building permit to install insulation.
Good idea to get a permit and discuss your plans with a local building
inspector before the work is done, then have it inspected after the work is
done. If no permit is required, might want to see if you can pay a building
inspector to check it out in their spare time or something - make
suggestions as to what would be best.