I know nothing about Israeli elections/politics, have some questions:
1. Is the country as a whole right wing/staunch religious?
The country as a whole is leaning more and more the right (debatable.) There are many religious people in Israel, and they have a higher birth rate, but the secular population is still the majority (28 seats of the knesset went to parties who are considered religious.)
2. What kind of results are expected for left wing parties?
Well, that ranged, depending on the party. In general, the only party defining itself as Left-Zionist is Meretz, the rest of the parties defining themselves as left are Non-Zionist: Hasash, Balad and UAL (United Arab List.)* The center bloc is usually merged into the left because of the lack of real left: Avoda, Livni, Lapid, Kadima.
So in general, I'd say the expectations of the center-bloc were to be big enough to bloc Bibi or to join him with bargaining powers. Meretz an the Non-Zionist Left probably just wanted to be a bigger opposition to whoever wins.
3. How do people there feel about Netenyahu and the settlements?
Well, Bibi ran out of most of the people sympathy. I don't think he's very liked but many people do not see anyone who could replace him (this is the failure of the "Anyone but bibi" mindset of the center-left, they failed to present a real alternative.) Settlement is most of a mixed bag, the big ones are considered legitimate by size (one of the bigger one just got a university.) The smaller one are considered populated by extremist and I'd say the public opinion is mostly divided on this issue.
4. Is the main issue in Israel about foreign policy/attack from other countries?
Hmm... It's obviously always there, but I don't know if it was the major issue of these elections. Most of the parties ran on a ticket of better economy, more welfare, making the ultra-religious conscript like the rest of the country... Mostly internal issues. The peace process was MIA in the entire campaign and no one seem to care too much about it. Iran was forgotten weeks ago.
5. What are the necessary forces required to change Israeli opinion to be more liberal?
Ahh... Well, I have no idea. I personally think Israel still has a long way to go, and the essence of racism and such will remain for quite some time. Perhaps, at this point, the only thing that will save Israel from itself is a strong American ultimatum forcing the sides into negotiations. Other than that, maybe another protest wave, this time going all the way.
* - This is important because there's no chance a non-Zionist party will sit in any coalition.