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A. Is there any difference between "stay away" and "keep away" ? Take a look at the following sentences:

1. Several children had to [color=green]stay away[/color] from school because of the bus strike. - Could I substitute "stay away" with "keep away" in this one? why/why not?

2. They say that the Old Manor House is haunted by ghosts, but I think it's only a story to [color=green]keep children[/color] away. - Could I substitute "keep away" with "stay away" here? why/why not?

B. Would it make any difference if I substituted "pass away" and "fade away" in the following sentences?

1. "Old soldiers never die, they simply[color=green] fade away[/color]" (an old song) I guess that "pass away" would be as good as "fade away" here...

2
. Grandpa passed away recently - "faded away" ? By the way - why isn't there "HAS passed away" ? I mean... we use present perfect for recent happenings... don't we?

Best wishes!
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No on all 4 counts.

Take a dictionary and study fade.
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A. In many cases "stay away" and "keep away" could be interchangeable, but not in the two examples you give.

1. "Keep away" here would suggest that there was something dangerous about the school itself, rather than just a difficulty in getting to the school. "Everyone has to stay away/keep away from the school until they finish removing the asbestos."

2. "Keep away" can be intransitive -- "keep away from the lake" or transitive "keep the children away from the lake." "Stay away" cannot be used with a direct object -- you can't "stay the children away from the lake."

B. "Pass away," when used about a person, is an idiom that means "to die." "Fade away" just means to diminish gradually or become less noticable.

1. If you said "Old soldiers never die, they simply pass away" it would mean "they never die, they simply die." This doesn't make much sense.

2. "Faded away" does not mean "die." If someone is still alive, but very sick and weak and losing weight and perhaps losing his memory and personality, you might say he is "fading away," but it does not mean dying.

You might say "Grandpa has passed away" if the body is still lying there and you are telling people that he just died moments ago. Otherwise, you would not use the present perfect because Grandpa is ... well, no longer present!

I hope this is helpful.