One is about the Level 4 Limit Breaks: when are you able to use the item (ex. the "Omnislash" item for Cloud) to be able to get the Limit?

I believe that you need all the other Limit Breaks, and then you should be able to use the item.

Another question is: where can I find the Counter Materia? A few sources I have found say "The Crater" but fail to tell me WHERE in the Crater. Thanks in advance.

Are you looking for the Magic Counter materia, or just the Counter one?