Alright, so when you enter an uncharted area on the map, you need to determine the terrain and the monster population of that area.
You do this first by drawing a (random?) number of cards from a 52 card deck.

Each of the 52 cards corresponds to a different monster.
Monsters are broken up by suite into four categories:
Hearts= Water Monsters
Diamonds= Mineral Monsters
Spades= Beast Monsters
Clubs= Plant Monsters

The kinds of monsters that dominate an area determine what the terrain of that area is like.

The 'Runners' in your group (Merchants, Trailblazers, etc.) should write a list of all the monsters in that area and mark down the coordinates of that area.

Generally, an area must be cleared of monsters before you can pass through that area unless of course the monsters are in an enclosure or your Runners have a relevant ability that allows you to sneak past them.

Engaging in Combat
To clear an area of monsters, you must engage and defeat each of those monsters in combat.
When you engage a monster, draw a number of cards from the deck equal to that monsters rank.
First, add up the number of cards from each rank to determine the monsters stats.
#Hearts= Defense
#Diamonds= Armor
#Spades= Offense
#Clubs= Weapon

Each of those cards also determines what special abilities and minions the monster gets.

Finally, shuffle these cards up and place them face down to represent the monsters hit points.

Combat

When attacking a monster
1) Turn a card from your hand face up. Add your modifier.
2) Turn one of the monsters cards face up. Add its modifier.
3) Check to see if any abilities trigger. If so, apply effects.
4) If the defenders card ranks lower than the attackers card, it is discarded.
5) When all of the monsters cards are discarded, it is slain.

When being attacked by a monster:
1) Turn one of the monsters cards face up. Add its modifier.
2) Turn a card from your hand face up. Add your modifier.
3) Check to see if any abilities trigger. If so, apply effects.
4) If your card ranks lower than the monsters card, it is discarded.
5) When all of your cards are discarded, you are exhausted.

OK, I know it is a lot of stuff, but what do you think?

1) How do I make nonrandomized settings work?
2) What is a good way to determine what the monstrous population of an area should be?
3) How can players randomly generate an area that isn't populated by foes, but by friends?
4) What if players randomly create a monster that is unbalanced?
5) How can I work role-playing into this?
6) What do players do if they want something non-randomly generated somewhere? What do players do if they decide that they want a certain place to be a certain kind of terrain and they want to fight a specific kind of monster at a certain time to progress the story?
7) What are some other questions I should ask?

Kevin,
1) How do I make nonrandomized settings work?
  You just have to set the mood and portray it consistently. That is all a setting is, an expression of the mood of the game, right?

2) What is a good way to determine what the monstrous population of an area should be?
I would use an ecology. What do the villagers nurture? What do they harvest? What do the forest creatures protect? What do they hunt down, why? In this surreal, gothic landscape, what are predators, what are prey?

3) How can players randomly generate an area that isn't populated by foes, but by friends?
Maybe use victory points from encounters to buy contacts. Sort of a "I get back to town and visit the alchemist. Here is my 5 VPs to populate the village with an alchemist, done." Its not totally random, but sort of is, isn't it?

4) What if players randomly create a monster that is unbalanced?
I think this is ideal. IF, you can setup a fair and balanced retreat system. I mean these characters are supposed to be villagers after all, right?

5) How can I work role-playing into this?
Again, I would recommend reading if not playing "Once upon a time" Its a card-based story telling game (not really an rpg). I think the mechanics from it would really push you in the right direction, you know?

6) What do players do if they want something non-randomly generated somewhere? What do players do if they decide that they want a certain place to be a certain kind of terrain and they want to fight a specific kind of monster at a certain time to progress the story?
Stack the deck. Let the players spend some resource (more vps?) to stack the deck, simple, elegant, no?

7) What are some other questions I should ask?
  Don't take this the wrong way, but I think your game lacks cohesion. Meaning I do not think a unified vision or goal has been driving this design.  I think you need to come up with a design goal/strategy make it solid in your mind. Then go back to all of your game elements, setting elements, mechanics, etc. and analyze it through this lens. Like, I think if you pump up the surreal/gothic feel and bring it forth throughout each and every element of the game, then it will give you the answer to a lot of your questions, you know?

  Don't take that the wrong way, I think you are super creative and have a great game concept. I feel like you are real close, and I guess that's why I want to try and push you a little harder.
  Good luck man!

I see what you mean.
I think I need to take another look at my power 19.
Thanks. :)