Hey Artanis,
It's good that you're able to articulate what is difficult for you. I have asked myself these questions many times. It's hard too because these things just come naturally to people without social anxiety.
How do you approach such a place?
(I assume you mean mentally.) Ideally you would approach the situation as if it was just a fun thing to do and a way to be around people. With social anxiety, this is pretty much impossible. You're better off accepting that it's going to be nerve-wracking and understand that you're there because you have the desire to improve.
Is there a good way to become uninhibited beforehand (ie not drugs or alcohol...)?
Hang out with a friend beforehand, or if that's not possible, call a friend up to chat. Even chatting for 5-10 minutes can make it easier to transition into a social setting. Here's another idea: go to a retail store and ask someone working there about a product. It's their job to be friendly and engaging, and you can get some free eye contact practice in.
What should you wear? (more importantly, what should you buy to wear on such occasions?) - what shoes are appropriate?
There's a ton of leeway here so just wear something you're comfortable with. I'm usually in jeans and a t-shirt. Collared shirts are pretty common, too. Play to your strengths. If you're really fit, wear something that's snug. If you have a few extra pounds, wear looser clothing and lean slightly on the dressier side.
What sort of drinks are appropriate to buy while there? (I ask because beer makes me uncomfortable probably because of a yeast allergy)
Water or coke. You can also ask if they have any juice (they usually have some for mixing drinks).
How much money should you take for the evening? (I'm rather frugal and these places often seem to be rather expensive)
Alcohol, cover charge, taxi cost money but you really only have to spend as much as you want. A typical bar won't have a cover charge unless there's live music (which is usually worth it) and you can avoid the most expensive part of going out if you don't drink.
How should you behave while there? - should you get a drink first? - should you sit or stand? - How do you avoid having a panic attack?
Get a drink first if you want. It's better to have a drink in your hand than your hand in your pocket.
Look around and see what other people doing. There's probably a combination of sitting and standing. Sit up straight, don't cross your arms (closed, defensive body language). It may seem awkward to have your hands hanging limply by your side, but really it's just fine. Look for someone who appears confident and do what they're doing. Don't dart your eyes around frantically; scan slowly if you want to look around.
If you feel like you're going to have a panic attack, you might try some relaxation techniques (Progressive Muscle Relaxation). Or you might be able to just reset some of your expectations. Make a goal that's so easy it's impossible to fail. "Stand in a bar for 10 minutes." Once you master that, try something a little bit harder. "Say hi to 3 people." I usually feel most nervous when I am holding onto unreasonable expectations, sometimes without even realizing it. Ask yourself if you are creating expectations and make a conscous goal for the evening that's within your ability, no matter how tiny, and count it as a success when you complete it.
Should you approach other people or wait to be approached?
Approach others! Unless you're unusually good-looking, you're going to be waiting an awfully long time otherwise. It also shows that you're proactive and willing to go after what you desire.
How should you start a conversation?
Obviously there are a million different things you could say, but a simple and effective opener is just "Hi, I'm NAME". If it seems weird to just randomly introduce yourself to somebody, don't worry. You're at a social venue and people understand implicitly that they're there to be social. Some people will be more closed off to others, if they're with a group of friends for example. It's not impossible to open them, just harder. Another way to start a conversation is to point out something interesting about the environment. In general, avoid overused statements such as "do you go here a lot?" or common topics like work or the weather.
What subjects should you talk about to other people? - and how honest should you be about yourself?
Most subjects are fine, the challenge is finding something that you are both excited about. Usually you want to avoid politics and anything that's really polarizing because it's just too easy to disagree and have that ruin the conversation. Ostensibly you're there just to meet people and have a good time, so why would you put so much energy into convincing someone of your point of view? Better to talk about something fun that you can both relate to. Also, the more people in the group, the more short and banter-like the conversation gets. People tend to just riff off each other and laugh a lot with a lot of people rather than have a deep conversation.
Oh, and the most important thing, stay positive! Nobody likes listenening to people complain. This is not an easy thing. If you're stuck in a negative mind set (which is likely exacerbated by your social anxiety) then you may find your thoughts automatically drifting towards negativity and things they say may trigger negative thoughts as well. Regardless, most people are there to have a good time and the people that have it really figured out are working within an unspoken rule of "no bad vibes" in order to maintain this. Now, this ties in nicely to your question about how honest to be. You can and should be honest with those you interact with. Being honest is the only way you can form a genuine connection. However, if you're admitting a weakness (which is ok; shows you're not afraid) you HAVE to put a positive spin on it. It's all in how you say it. Don't ever try to elicit pity. For example, if the topic of meeting people and being in novel social situations comes up, I might say something like, "I have a tough time meeting people, and I feel anxious sometimes, but there's always that getting-to-know-you period which can be awkward. It gets better just by being around that person for a bit and getting used to their mannerisms." You've taken something negative, your social anxiety, and turned it into a potential strength: you have awareness of yourself, patience to get through awkward situations, and you appreciate the little things you learn about someone when getting to know them. These are all subcommunicatons that you make when you say the previous statement with authority and a feeling of being in control of your destiny.
How do you read the subtle messages of other people accurately?
There's no way to tell exactly what someone means, but you can raise you awareness of others' signals just be practicing being observant. If you suspect that someone is thinking something different than they said, or if there is some other feeling hidden in what they said, you can often just ask. For example, "I get the feeling that you don't agree with your friend's actions. What is it about them that bothers you?" If they are thinking something similar, it can give them a chance to clarify, voice their thoughts, think of something in a new way, and create a better connection with you. Even if you make an incorrect assumption, it actually still comes off strong because it shows you're not afraid of making mistakes.
If you have anxiety issues, then how do you concentrate on a single voice in a crowd of voices drowning out every sound in the area?
Accept that it's really noisy and that the other voices are causing you anxiety then try to turn your attention back to the person you are talking with. Really think about what the other person is saying. If you are fully engaged in the conversation, the other voices should fade out.
How do you get someone to like you and want to spend more time with you?
I wish I could give a good answer, but this is a HUGE question and there are so many levels of analysis here. I'm not nearly knowledgeable enough about this. In very general terms, you have to convey abundance, be approval-giving not approving-seeking, and speak and carry yourself with confidance and authority.
How do you and when is it appropriate to exchange phone numbers with other people?
If you feel like you made a connection with someone and you want to continue the interaction at another time, then it's appropriate to exchange phone numbers. What's then worst that can happen? They say no? That's pretty tolerable. You can say something like, "I really enjoyed our conversation. Let's exchange numbers so we can continue this another time." Or it can be fun to give a silly reason that references a joke earlier in the conversation, "Let me get your number so I can call you for directions when I get lost in the supermarket." Or here's one I used successfully just the other day: "I'm going to give you my number, but you can only call if you're extremely bored and have exhuasted all other possibilities."
Should you flirt? - and how do you do that if you have difficulty doing that?
Sure! Flirting is fun and is a natural way to interact with people you're attracted to. If you don't know how, don't worry about it. Just concentrate on trying to create a connection with the person. Touch their shoulder or elbow when they say something particularly funny or interesting as you respond. Shoulders and elbows are generally considered public space. You can move on to touching their hands occasionally if you feel like it's going well. While flirting is playful and indirect, a lot of indirectness can just come off like you're afraid to be open with your attraction. For example, a girl is surprised when someone doesn't answer her question and you casually say, "well, he must be afraid of pretty girls!" It's obvious that you're calling her pretty, but you had to hide it in another statement. Not attractive. Better off being direct and using touch to escalate the interaction. As for having difficulty with it, you'll get better with practice. For the touching thing, which is really important but a lot of people aren't used to, I just started giving more hugs and learning to be more comfortable with physicality.
How do you impress a person you are attracted to?
Again, this is such a hard question. I touched on some ideas in my previous answers, but you will really want to explore some material from the charisma/attraction/social dynamics community to answer this question. I can respond to the framing of the question though. While you ultimately do want them to be impressed with you, you should approach the situation the other way around. What qualities do THEY have that are admirable? What is interesting about them? If you can turn the interaction around so they are the ones chasing you instead, you will be miles ahead.
What other considerations are there for effectively blending in and having a good time?
There are a ton of little things you will learn as you gain experience in different social situations. This is one area I've had a lot of trouble in. While I've enjoyed some short-term success and have a good idea of many of the underlying principles, I simply haven't exposed myself to enough social situations on a regular basis to internalize these ideas. And if I retreat to solitude for days or weeks, it just makes it that much harder to leave the house and do anything social. I want to increase my stability and consistency in this area. I believe practicing these techniques, facing our fears, and regularly exposing ourselves to these situations is the only way we can enjoy these kind of activities like most people. It's a lot of work, but hey, if it means an end to the crushing embarassment and debilitating anxiety that plague us so often, I think I'm willing to put in the effort. What do I have to lose?
Hope some of these answers provide useful, and I'd be happy to discuss any of these in more depth.
. Im strictly against drugs and im 32 and male. I go semi regularly to a club on my own, i dont socialize that much with other people but i just have a drink and a dance and i always love it 
