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Are you outside, during the day? I don't know anything about the auto modes, but just set your camera to the P mode and it should expose things pretty well automatically. Also, then you don't need to worry about the "flash mode" since it won't fire unless you raise it manually.
1/3 or 1/2 ev steps is just a personal preference thing. 1/3 ev steps gives you finer control over the aperture/shutter/iso settings, but isn't really crucial since the proper exposure is fairly subjective. I left mine set on 1/2 since for some reason I prefer shooting in the "traditional" aperture values and don't want to turn the dial as much.
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