This spell has nothing to do with magic jar, except that the effect is somewhat similar. This spell does what its text says and nothing more or less than that. Based on your questions, it sounds like you might be confused as to how spells work in general. When you cast a spell with a target, you choose a valid target in range to whom you have line of effect and that target is the target of your spell. If you choose an invalid target, the spell doesn't work. Spells can overwrite these mechanics, but they have to specify that they do so. Marionette possession does not specify any changes to the normal way spells are cast, so there aren't any changes from that.
Is this by line-of-sight (can directly see the target), line-of-effect (nothing solid blocks the path but can't necessarily see the target) or is it like Magic Jar and you only have to know where they are within range?
It's by line of effect, but that's not how line of effect works. "Line of Effect: A line of effect is a straight, unblocked path that indicates what a spell can affect. A line of effect is canceled by a solid barrier. It's like line of sight for ranged weapons, except that it's not blocked by fog, darkness, and other factors that limit normal sight." source
From the core rule book's chapter on magic, it states that unconscious creatures count as willing, is that why this spell has a will save, despite the rules of the spell specifying that it can only target willing creatures? As why would a creature that agrees to go along with this make a will save to resist this? Or am I missing something?
No, that's not why. An unconscious creature would still not get a save, because they are willing. The exact reasoning for the save on the part of the developers is unknown to me, but the save entry is certainly not pointless because many game mechanics interact with spells based off of whether they allow a save or not and of which type. You don't need to worry about the save unless it comes up, at which point what to do with it will be clear. The pfsrd site suggests the save be editorially changed to 'none', since the '(see text)' clearly doesn't apply, but that's sort of up to your DM.
Is it accurate to say this 'save once and immune forever' rule doesn't apply to Marionette Possession? Even though the summary text says this spell is "as Magic Jar"?
Yes. The summary text is just giving you a brief and inaccurate summary of the spell effect. The summary text does not dictate the effect of the spell or its behavior.
If this was cast on a sleeping creature would they have any indication that something tried to possess them if they succeeded on all saves against the spell?
"A creature that successfully saves against a spell that has no obvious physical effects feels a hostile force or a tingle, but cannot deduce the exact nature of the attack." (Page 216 core rules)
Does this mean that you can move, in the possessed body, further than the spell's maximum range? So if the range was 150ft (caster level 5, without Reach Rod) and you cast it on a sleeping guard at the end of a 150ft corridor from the prison cell you were still locked in. Could you then get up and leave the line of sight of your now helpless body and go exploring around the prison to find a key to unlock your cell door. You'd have about 50 minutes to get back within range but now does line of sight or line of effect apply? If you race back just as time runs out but can't actually get line of sight to your body, even though it is within 150ft, do you "die" as your soul cannot be returned to its body?
No, that's not how spells work. The 'range' entry has nothing to do with how a spell works after it is cast, unless a spell specifies otherwise. For spells with a target, it merely limits what targets are valid. This text does not let you run around outside the spell's range with your stolen body, you could already do that by default. Furthermore, line of sight and line of effect also only matter when casting spells. You can take over a guard, run the full duration of the spell in a straight line, closing lead blast doors behind you every 10 feet, and then get thrown back to your body when the spell ends unless something extra prevents that from happening (in which case you die). The only time range matters in this spell after it is cast is in the case that the host body dies.