so would i have to clean it out the next day after everytime its used and what happens if i dont?
You wouldn't get the air flowing through to keep the fire going - the ash blocks the flow
so about £5 a fire, do you think thats abouit what it works out too?
No. I use a good quality smokeless fuel with free wood. I keep my stove in for a bout 4 months of the year though so it is different to lighting the odd fire. I would guess about £2 per day on really cold days if you are savvy about it.
if i went to some local areas and collcted wood, what would i have to do to it before putting it on the fire? dry it out somehow?
You have to dry it out for a year - it's not necessarily the rain - it's the sap you need to dry out - I can dry out rain soaked logs in a few hours after bringing them in (although I don;t have to these days - I have a woodshed). It's the sap you need to be rid of otherwise you get loads of smoke.
and can you bake potatoes in a open fire or anything?
No. I have a special pan I can do waffles on top of my stove on and baking anything (such as chestnuts) means I have to find a rack which will mean they are not touching the stove - otherwise they burn - badly. You can do baked spuds on bonfire wrapped in loads of tinfoil but I think a homefire is too intense?