Materialism, do theists really understand what it is?

Dr. Craig received a question from new believer in Belarus. Atheism, Materialists and Marxists is the major viewpoint where he is from. Chances are that some of you have the same question, or are being asked the same questions. For more Q & A from Dr. Craig please click here.
Here's the question:

Dear Dr. Craig,
I am a young born-again Christian from Belarus (nominally Eastern Orthodox country with a recent history of 70 years of militant anti-religious Communism), and I want to thank you for your ministry. Watching your debates with the "New Atheists" such as Harris and the late Hitchens has been very inspiring. My wife and I were appalled at how poor the arguments of Sam Harris were for objective morality without God, for example. God bless you and other apologists for restoring the rationality of the Christian faith in this day and age of the insanity of relativism!
Right now I am studying apologetics by example of Greg Koukle, yourself, R.C. Sproul, and others. However, I lack a solid philosophical background, and that's my reason for writing to you.
I'm currently in an email debate with an atheist (we have many in our country). The relevant part of the correspondence follows.
In light of the dialog below, could you please clarify some things about materialism for me, and/or also point me to a good resource that's not overly daunting? Also, if I made mistakes in reasoning, could you identify those, too?
The questions come right after the dialog, which sets the context for them.
Atheist: Theists misrepresent materialism when they say that in materialism only material things exist. But of course immaterial things exist! Emotions are immaterial, yet they exist. Materialism only says that the material is primary (cause) and the ideal is secondary (effect or manifestation of the material).

Theist: I'm not sure it's a misrepresentation, it seems that's what a lot of materialists say, yes. Vulgar materialists and modern materialists alike say that emotions, feelings, love, duty, good and evil can in fact be broken down to elementary particles working in our brain. Which is matter. So emotions are ultimately made of matter, so they must be material to a consistent materialist.
E.g. Dawkins says at bottom there's no good or evil, so no morality or virtues are possible. Then, inconsistently, he calls God 'evil' -- which doesn't exist according to him.
Atheist: I agree they can, that, e.g. emotions can be BROKEN DOWN to physical processes in our brain, but that doesn't mean immaterial emotions DON'T EXIST. Immaterial emotions do exist, since "being broken down to" and "existence" are very different things.
And you misunderstand Dawkins. Of course good and evil exist, but no objective STANDARD for discriminating between the two exists.
Theist: How can emotions really, objectively exist if matter is the only substance? If everything is made of matter, are emotions part of everything? If they are, they are either material, or they don't really exist, they are illusions. What actually exist are neurons firing in our brain, and that's what science studies.
Atheist: I didn't say everything was MADE of matter. Speed is not made of matter, yet it exists. Emotions are a MANIFESTATION of material processes, but they actually do exist (they are NOT illusions) and they are IMMATERIAL, they are not made of atoms.
Theist: Aren't you breaking the fundamental law of philosophy and science -- the Law of Causality here? You've only got matter to begin with as an initial cause, but it somehow creates something it doesn't have -- non-matter (immaterial emotions). It seems that matter creates non-matter 'ex nihilo', no?

Questions I'm struggling with:
1. Do theists indeed misrepresent materialism when they say that to a consistent materialist nothing but matter must really, objectively exist?
2. What IS real, objective existence? Does it mean the existence of something independent of the observer? In that case, can an atheist say that my emotions objectively exist to him, since they are independent of him? Or does objective existence mean existence independent of our consciousnesses, at least?
3. In materialism, matter is the only substance. Does it mean that everything have to be made of matter, ultimately? If so, can emotions still be immaterial in a materialistic worldview? Or is it some kind of 'worldview cheating' or equivocation in terms?
4. If materialism is false, what would be some good ways to attack it? We don't have a lot of Mormons or JWs in Belarus, but a whole lot of materialists and Marxists, especially in the academia.
Thank you for your time and your ministry, your comments would be very much appreciated.
God bless,