You are spot on, 'was' as in the interrogative noun cannot be placed in this position in a German sentence. But I have heard native speakers use 'was' as a short form of 'etwas', in which case this does make sense. Although I again agree, it is quite strange for this to be in beginners level German...
Sounds really weird. If it was "Is something with dad?" shouldn't it then be "Ist etwas mit Vater?" when "was" is often used in the spoken language, right? I understand this like there was just ~something with the dad, maybe not even wrong and stuff. Hm. It's hard when you can't speak German that well yet.
I think its emphasising the point that the question word needn't be at the start of the sentence, that "Ist was mit Vater?" and "Was ist mit Vater?" have the same meaning.
I think that the lack of annunciating the question (there should be a rise in the pitch of speech to denote a question) is much more problematic than the grammar for understanding the sentence.
Although, I also don't understand the real sense of this, I think that it's not the same to ask "is something..." than "what is...", since in the first one; I wouldn't know whether really is something, but in the latter, I could be presumming or even having certainty about the existence of something, though I didn't knew what exactly such thing is.