Translation:This is the forty-second railway station in the city.
No, only kettő (2) itself becomes második (2nd). Everything else with -kettő at the end becomes -kettedik.
Similarly, egy becomes első, and anything else with -egy at the end becomes -egyedik.
No, simple stops are megállók. Pályaudvarok are large stations, most often in a dedicated building, where multiple lines (mostly train or bus lines) run together. You might call them "central stations" or something.
No, it doesn't make much sense having forty-two of these stations in a single city.