1) If there is a warrant of breach of probation for the sponsor, how would it effect the sponsorship process? There is no criminal record.
What kind of crime was committed? A person who has committed certain types of crimes cannot sponsor: violence towards a family member and sexual assault being two.
2) If the sponsor has any student loans, does it effect the sponsorship?
No. If there are huge debts, just increase the amount of proof you submit showing your plans for your economic future together.
3) The sponsor is not employed and obviously has no income, but has the supporting from the parents and brother who is a doctor, stating they would provide full support for residence till the sponsor finds employment.
The parents and the brother should write a letter or affidavit stating what kind of support they will be offering the couple to help them settle in Canada. Include these with the application.
4) In this case it is important that the spouse must accompany the sponsor due to sponsor's health conditions, hence wants to stay till the receipt of PR and travel.
Canadian citizens can sponsor while living abroad. However, they must then include proof in the application that they will be returning to live in Canada with the applicant. The letters or affidavits from your parents and brother can be part of that. Explain where you will live, what jobs you will have, how you will support yourselves until you get jobs, plans for school, etc. And include proof of this. You can also include proof of your plans to leave India, such as getting quotes for moving, plane tickets, letters of resignation from jobs, etc. Anything that shows you are planning to leave India and move to Canada.
6) How good are the chances for getting PR for spouse and what is the best way to proceed.
Since you have been living together for more than a year, that is very good proof the relationship is genuine. You need to prove the relationship is genuine, and you need to prove the applicant did not marry you just to get into Canada.
7) What are the important documents that need to be submitted.
Look at the first post (by Leon) in this subforum.

Visit visa for the spouse has been refused once.
This is probably OK. Many failed attempts to enter Canada look bad to the visa officer, but one or two failed attempts, especially if it was just to see you, are usually OK. If the TRV was in order to visit you, make sure you mention that in the application.