"le" is the direct object form of "him". "lo" means "it".
Edit: Hmm, I just read eghost57's post below: "Lo can be he or it as a direct object.". And I looked it up which I should have done before. This says that "lo,la" direct object means "him her it you formal" http://www.studyspanish.com/lessons/dopro1.htm
But I'm pretty sure that "Yo quiero tú" isn't correct. I think it would be "Yo te quiero".
Yep, I do follow, and I'm unclear too. The more I read about it, the more clear it is that "lo" can mean either "him" or "it". I was hoping that when it was "him" you'd have to add "a él", but it doesn't look like it.
For maximum confusion, this site http://spanish.about.com/od/pronouns/a/direct_objects.htm says 'In some parts of Spain, le can substitute for lo as a direct object when it means "him" but not "it." Less commonly in some areas, les can substitute for los when referring to people.'
Right, there is no grammatical difference; actually writing or saying the "that" is optional in this type of sentence. http://www.quickanddirtytips.com/education/grammar/omitting-%E2%80%9Cthat%E2%80%9D?page=all
I imagine that's one of the things that drives learners of English crazy.
No, that's not valid English. "wishes" is a verb that goes with "that" or "for", "she wishes that ..." or "she wishes for". It's not a verb that can just go with "him" in that way. Also, "badly" is an adverb, so you would have to use an adjective like "very badly", you can't use "too" which is another adverb.
"I know that she much desires it" marked wrong; is that because "much" is in wrong place in my sentence? Also, I notice on DL translation no "that" after "I know", so is translating "que" optional? (I know in English "that" it is sort of a "filler" word that usually does not change the meaning of many sentences.)