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So I got the boxed set, Sorcscha, Destroyer, and Juggernought.
What are a few ways to fill up the remaining 198 points to make a 500 point list?

The FOC of 6 isnt that much to go around, probably 2 per jack but that really limits me.

So Im thinking, what kind of troops?

A unit of Widowmakers are a completely nessecity (as you just shoot them and hopefully take out the movement nodes on an enemy jack) and also they're cool as hell.
Iron Fangs? Man-o-War? Winter Guard?

Widow Makers
Iron Fang Pikemen
Manhunter
Eyriss
Terion Wizards

All of the above are fantastic.

Oh right, which brings me to the next q.
Mercenaries, you can just take them withen the limitations right?
I couldnt find any rules on "how to use mercs".

Mercs will have their limitations printed on their cards. EG Eyriss can't be within 5" of a 'jack and won't work for Cryx.

A lot of people like Sorscha (epic and not) with Winterguard and especially with mortars. It seems that a number of folk also like running Sorscha with a Kodiak, but from what I've read/seen, you want to keep yourself to only 1-2 'jacks in a Khador list anyway. I know a lot of people like MOW kovniks (allowing the 'caster to use their spells and not have to allocate focus to the 'jacks) and there's been some very positive talk on the Privateer Press forums about MOW demolition squads, but that may balance out as the unit becomes more common and other armies develop strategies to mitigate their abilities.

The Privateer Forums are actually pretty decent: http://forums.privateerpress.com/index.php?act=idx Check out the Newbie and Khador (under Warmachine Tactics) sections.

Kodiak?

Uh...
This might be stupid but...
I only own the "Prime" rule book, do I need to buy the Apothoses and/or Escalation to use the rules for those jacks?
Or am I thinking GW's way of "if you dont own the codex, you cant own the models and rules"?

Im on a rather tight money budget (gotta stop spending so much) so Ill drop buying 40k stuff for now (so expensive!) and just finish warmachine.
Then save money.
Lots of money.

You can look at the rules in the store and then when you buy
the figs just don't lose the unit cards. A few special rules get
released with each book (like Trample or maybe even elite
cadres and bonded warjacks) but I don't think you need the
books for these rules.

While you typically don't need ALL of the new rules, having the newer rulebooks will give you a good idea what your opponents are capable of.

If you want the new Escalation rules (but no card rules) go here:
http://www.privateerpress.com/WARMACHINE/default.php?x=game/downloads

You'll even get a sample of some of the new stuff in Escalation.

If you buy a deck of faction cards (~$12), you get color cards for all the units your army is capable of fielding from prime through escalation. You'll also note that some of the wording on these new cards is slightly altered -- the rules/wording on the color cards tends to be more accurate (with a couple of exceptions... mage blight (cryx) as an upkeep being a glaring error).

Generally speaking, the color cards contain word-for-word, the rules in escalation and prime (or, what the rules should be).

An excel based army builder is available here:
http://dacarnix.gamestlouis.com/index.html

If you want decent descriptors of the Khador units, try Ringsnake's Battle College:
http://warmachine.mgana.com/wm-khador.shtml

While I don't agree with him 100% all the time, it's an excellent resource for beginners to get an idea of what's out there.

Well, I'm building up my 500 pt. list of Khador and I'll share what I have.  Warning, I am not a master list builder.  I have no idea if what I am building will be super great or not.  I am also fielding three jacks which may not be the best tactically but I want to see what it can do.  I'll give my reasons for this too.

Sorscha.  Well she came with the box set and well she's Sorscha.  (Altgough I have been playing with Vlad and loving him...more on him later)

Destroyer.  Great model people underestimate his bombard cannon.  I put 2-3 focus on him.  I boost to hit, boost damage, and use the third to boost damage if I catch someone with collateral damage.

Juggernaught.  Tough hth model.  People fear him.

Kodiak.  Can run without a focus.  Can two handed throw.  Can move thru rough terrain.  lots of other goodies.  I have not figured out to use him effectively yet.

Widowmakers.  Because yes they do rock

Manhunter.  Because he does rock too, but I have not learned to use him right yet either.

Mortars.  They have really low RAT but they do give us some extra range and punch.  I am not liking them that much tho.

Extra above 500 or would have to swap some things out.

I am thinking of using Winterguard.  I dont see too many people using them.  Iron Fang Pikeman are awesome.

Check my points, because I was just going off the top of my head.

Re: a second warcaster, I recommend picking one up because with a different warcaster you have a whole new battlegroup to play.  Different spells, abilities, feats, etc...

Good Luck.  If you are ever in northern NH come on up.  We play at Empire Games check out our flex league here on dakka.