both are correct: /pɐˈʐɑlustə/ and /pɐˈʐɑləstə/ (or even pɐˈʐɑlstə). The second one is just more relaxed.

See for yourself: http://www.forvo.com/word/%D0%BF%D0%BE%D0%B6%D0%B0%D0%BB%D1%83%D0%B9%D1%81%D1%82%D0%B0/#ru

Use the first pronunciation, it's right and more easy for you :) In the second case "uy" is very reduced. Generally, it's no "uy", it's some other sound, more similar to "u".

pazhalusta is correct, yes. You can HARDLY hear that "y" which comes after "u" (it is VERY reduced), but you can certainly hear that "u" after "l". So, "pazhalusta" is correct.

пожалуйста = pazhalista .