Barnell: Hypothetically If I'm between the Harzhan and the archer; will that prevent the archer from being able to attach Harzhand?
Short answer: no.
Long answer: typically, the down side to missile weapons is that they add an additional "plus" to the target's ability to dodge. So a sling, for example, can have a +25% to dodge, meaning the target has a 25% chance to avoid that damage (plus whatever innate dodge ability they already had, so Cat, as a Rogue, would have a 45% chance to avoid the damage in such a case.)
This mechanic is designed to incorporate the idea of potential "obstruction" in a more streamlined manner. Thus a missile weapon with a range of 2 has a certain increased chance to be dodged, and a missile weapon with a range of 3 has an even higher chance to be dodged.
In this case, however, as a tutorial mission, I did not include a "plus" modifier to the Archer's weapon. Rather, he is just pretty darn weak and has lower HP.
And can Harzhan still cast spells on the archer?
Yes. Obstruction doesn't matter here.
If I’m in the same block as the warrior will that increase, decrease or have no effect on my attack?
Short answer: no effect.
Long answer: It will have no effect, unless your weapon specifics that it does. The dagger, for example, does have such a benefit. It does slightly below average damage from a range of 1, but way higher from a range of 0. Each weapon has it's own unique benefits: in the case of your Longsword, it's simply one of the most powerful weapons in the game in terms of it's guaranteed damage and it is more likely to connect with it's target when used, because it erases 15% of the opponent's chance to block.
I respect that there are definitely ways to make the game more responsive to situations such as a closer range. It's one of the things I would like to work on. For now, I've basically just been adding a new feature or two for each game. (It's a lot at once.)
Hope that answers your question.