Double Sided 3x5 card ID placement help?

In PS, make sure there's enough image to accommodate a bleed if needed.

In AI: Make a new document, artboard size at 3.5 x 5.5, two artboards. Place each PS image at the same size and at the same position, one on each artboard. Save. Print two sided, then trim to 3x5.

As far as aligning your substrate for the envelope tray, that's generally something you'll have to read about in your printer manual. Often it's a trial & error situation. Keep printing till you get it all to align properly.

I'm not following your last question. Why would you size a 3x5 card at 8.5x11? If you want to print a 3x5 on a larger sheet, and you want it to be centered on the larger sheet, you can adjust things in the print dialog box. Or, just center the 3x5 on an 8.5x11 artboard and then print that (which is also the solution if you plan to print on both sides manually.

Good luck! Hope that helps!