4. IMO the AP's ignore XP, and use Milestone levelling. So level them when you think it's appropriate to the module.
1) There is usually significantly more XP (and wealth as they follow the same rule of application) by significant amounts to get to where your party "should" be by certain parts of an AP. This is because you are supposed to miss some rewards, sometimes you have breaks for random encounters to catch up because there was a long section with lots of miss-able rewards, etc. The AP's are usually given around twice the XP (and again WBL) than you should have.
2) When it does think you should double check and give them some "bonus catch up rewards" it's very explicit in the text to say that.
3) You still divide XP rewards by 4 (for a party of 4 or 5, otherwise divide by the number of players or consider running for a smaller group if you have 7+ players active at a time).
4) This is generally a good idea for most AP's but some AP's will have bigger "sandbox sections" or are just Kingmaker and there's a reason to run XP over milestone (even if its not universally better even in those niche cases).
If the players are in fact consistently falling behind, maybe do a double check to make sure you are in fact giving them all the non-combat rewards they deserve, including disabling or enduring traps/hazards, avoiding combat with enemies that would otherwise be needed to fight, and so on.
Without more detail, such as which AP you're running, and what your party has exhaustively done so far, I can't really give more specific of an answer.
Ah well Way of the Wicked is a 3pp AP, not official Paizo content so their design philosophy isn't guaranteed to be followed. I have the book but I don't see where it even mentions which track they use, though I might assume fast track.
And the way you explained how you count XP for multiple enemies in an encounter was weird so I'm not sure what you mean. You should be giving them the XP for each enemy defeated/avoided/etc.; e.g. if there is 1 CR 1 guard worth 400xp, you give the party 400xp which divides to 100xp each. If there is 4 of the same guards, you give them 4 times 400xp equals 1,600xp, then divide for the party for 400xp each.
Ah well Way of the Wicked is a 3pp AP, not official Paizo content so their design philosophy isn't guaranteed to be followed. I have the book but I don't see where it even mentions which track they use, though I might assume fast track.
And the way you explained how you count XP for multiple enemies in an encounter was weird so I'm not sure what you mean. You should be giving them the XP for each enemy defeated/avoided/etc.; e.g. if there is 1 CR 1 guard worth 400xp, you give the party 400xp which divides to 100xp each. If there is 4 of the same guards, you give them 4 times 400xp equals 1,600xp, then divide for the party for 400xp each.
I remember D&D having a more complicated system for those (because, say, a 6 goblin encounter is more dangerous than 6 encounters of 1 goblin each)
WotW uses medium advancement track. It is mentioned somewhere at the beginning of 1st and second book.
Not official Paizo content? That might explain it... although I remember having similar problems with Council of Thieves
So, with players who chose EXP over Milestone, what should I do?
Give more XP. for no reason, just give more XP. Or have side quests. or have extra bad guys. Or just let the party be below the level listed in the AP. OR just use Milestone levelling without telling them.
DnD did, and it gave you diminishing returns for weaker enemies over their listed XP reward, but in pathfinder they did away with the system because the game plays much tighter with CR (lower CR enemies are far less of a threat so you just stop encountering them all together beyond a certain APL-N CR instead of them being tiny road bumps *that could still be threatening* in 3e if you were totally careless).
Personally, as long as they aren't more than 2 levels behind, you can probably be fine to just go as is, 1 level shouldn't be the difference between a win and a loss for any fight beyond other greater factors like using effective tactics. If they are or start getting close, maybe just add in a mini-section of your own creating (especially to help fill out whatever flavors of evil they're missing or have missed) to get them closer to where they should be. Book 2 might be a bit harder to justify, but maybe you could have the orphanage become a full church affair that would mean the newest invaders to their dungeon would have blessed gear if it wasn't swiftly dealt with (letting the party also burn down said orphanage like the puppy-kickers they are!); later parts where you are traveling more, you can just add in forts or other outlying and juicy targets to evil-bait your players.