Not as rude as in English. It may be construed in Russian as "what would you like?"
Михаил*, if you use the Russian name. Also, if it's formal, you would use his patronymic name second. For example, if his father's name is Иван, then you would say, "Что вы хотите, Михаил Иванович?"
The pronunciation of хотите in the exercise sentence is awful. It sounds more like сайчите. Here's a decent pronunciation of it:
Can't translate unless I'm reading it!! This sounds like Fe instead of Kho!!!