"Thanks for answering my questions"
No problem :)
"Do you have a verse or two to support this?"
Well, you yourself cited some verses showing that both believers and unbelievers would go to sheol at death, but we know some verse describe sheol in not so nice terms (Job 26:5; Isaiah 14 being just two), so we infer from this that unbelievers experience punishment there, whereas believers naturally would not experience this (Job 14:13; Psalm 73:24; the "translation" of Enoch & Elijah et al).
Vander: How did Lazarus merit going to Abraham's Bosom?
James: "Faith/repentance towards God."
Vander: Which verse in the account supports this?
Answer: Remember we should take into account and not lose sight of the wider view of Scripture which indeed does state that repentance saves one from punishment. Therefore, it would not actually matter if it was not mentioned in the story, particularly in a high-context society. However, that said, verse 29 mentions that the rich man's brothers (like himself) had failed to listen to the prophets, which shows their lack of belief and unrepentance (verse 30).
Vander: Why didn't the rich man go to Abraham's Bosom?
James: "Lack of the above"
Vander: That's not the reason Abraham gives. The only reasoning is: Good now, bad later.
Answer: But why is he "bad" now?. What do the Scriptures as a whole tell us about faith producing works? You can't read "out" (as opposed to "reading in") what the rest of the Bible says and isolate Luke 16 from the wider context. Again verses 29-30 are key, since they deal with why his brothers will go there to join him.
Vander: Didn't he demonstrate genuine moral concern for his lost brothers despite his overwhelming pain?
James: "Maybe, but I don't see why that means he escapes punishment."
Vander: Punishment for what?
Answer: Sin, unrepentance.
Vander:Why would the rich man merely ask for a drop of water if it would not even begin to cool his tongue?
James: Knowing it would be too much to be asked to be set free completely, he asked for the solace of one drop of water.
Vander: Can't legitimately get into the rich man's head....but one drop would certainly not bring solace of any kind.
Answer: Really? How do we know the extent of his pain (if taken as a literal picture)?. He was asking for a slight decrease in pain because he knew it'd be foolish to ask for more than that.
Vander:Does that mean that those in hell catch the attention of and converse with those in heaven?
James: No, both the rich man and Abraham were in sheol.
Vander: Excellent. So are you saying that the people CURRENTLY in the bad side of hell can communicate with those on the other side?
Answer: No, because believers who die no longer go to sheol but, rather, to heaven.
Vander:OK, could hell be an enjoyable place for the righteous as they see and hear the cries of the tormented?
Answer: Well, as I say, believers are not in sheol anymore (it changed at the resurrection of Jesus), so it be better if you phrased it in the past-tense by saying, "Did those righteous in sheol have happiness even though they could hear the cries of the damned?" Answer: Remember at our death we have the mind of Christ in full operation (no longer hindered by the "flesh") and thus we see things as God does, so maybe it won't affect our enjoyment. Also, as JP Holding says in response to soul-sleep advocate Samuel Bacchiocchi when offering a similar objection: "Other than that Bacchiocchi has an emotional objection about how we could not be happy in heaven if we could see people tormented in hell, but that's rather off base from Jewish perceptions and amounts to anachronizing his modern individualism on the text."