ccplim, the first pic is well composed and well taken, good work!
As per regard to your question, I am not exactly a very expeerienced shooter so these are just my humble opinions :
Q: 1) How do you actually locate the subject so fast through the viewfinder while using a zoom range of 400mm and above? I discovered that most of the time, I actually have to hunt for the sujbect and by the time I found it, it might have flew away to another location.
In reality, you are right. It isn't easy to locate your target with such a limited angle of view. A few fellow photogs had provided you with their solutions. As for myself, I employ a combination of "both eyes open" and that of a finger pointing along the axis of my lens to "guide" my vision. I find it much easier to track small flying objects this way. That said, there is no shortcut to more practices, so I will highly recommend that you practice whenever you can, I am sure you can get the hang of it soon.
Q: 2) Do we go for auto or manual focusing? I noticed quite a few times that my lens was actually hunting for focus even though I had the subject in the center.
This is quite a subjective question, the decision for me to go manual focusing will largely depend on the target itself. For one, I will not resort to manual focusing if it is hard for me to assess my target's details. The part on your lens hunting is largely dependent on the sensitivity and accuracy of your Auto Focus system but a general guideline would be to lock your target when it has a good contrast because this is the basic theory AF works on. If you have a lens that has FTM (full time manual, or ie. allow you to manual focus without flipping a switch), I strongly advise you to keep you hands ready on your focus ring so that you can achieve focus in situation where Auto Focus fails.
Hope this is helpful to ya and keep shooting!