I don't think anybody knows, but some things can be guessed with a pretty good accuracy rate, so I will try to reason logically and we can debate then.
1. Is the exam run off the local network or the local PC, at the exam center ?
Most probably the tests run off the network. This would make updating content much easier. Each month, GMAC updates the tests and new questions are posted. It does not seem there are any reasons to run GMAT locally on each computer. Administrator has access to each test/etc, so probably that is implemented easier if the network is involved.
2. What is the GMAT database of questions like ?
I don't really know why you want to know this. I never did
So, I never gave a thought to this question. My best shot is that it is about 200 math and 200 verbal questions and they are ranked by difficulty. Part of these questions used to be experimental or perhaps all of them, but i doubt - that is a too big risk for GMAC.
3. Is the exan run off a CD or something else ?
Off the Server.
4. How often is the GMAT question bank updated ?
Every 30 days; it is completely rebuilt
5. Do different regions of the world have different levels of difficult questions ?
Good question. I think there are differences in different regions, but i don't think difficulty is one of them. It is possible that experimental questions are rotated world-wide, but I don't think difficulty is different. GMAC tries to make things equal a way too persistently - they sent me a large letter yesterday complaining that somebody posted a real GMAT question on this Board and requesting to take it off. It would be really unfair to do something like varying difficulty levels. It is more from the land of politics than educational testing services.
6. What algorithms are used by the GMAT engine to dispense questions ?
I wish I knew this one. I am sort of working on this, but there are only guesses. The easiest one is that if you miss a question, you get an easier one, and if you get the question right, you get a harder one. It seems that GMAT has points assigned to individual questions, so if you get a hard one right, you get more points added to your score and if you get the hard one wrong, you get less points subtracted than if you got an easy one wrong.
7. Are GMAT questions adminstered on the basis of race, region or sex of the participant ?
I think that would be impossible.