Does everyone they thought they knew have to be dead? I kinda liked the idea of pining/worrying/etc for someone who never existed.
Amarlo was largely correct. It makes sense that their simulated life experience would have shared real individuals with them so that the transition into actual life went more smoothly. As for people from before such as like family and friends, no they need to actually be dead according to their histories - but the assumption is that once they agreed to take on this 'special mission' from Gabriel that they wouldn't be returning to their former lives. So... If in their virtual life they had a lover, for instance, they agreed to give that person up when they went with Gabriel. So they would still think that person was alive, and want them and all... But totally be in a position where they couldn't get back to them. So you should be able to replicate what you're wanting easily enough, yea.
Bah... I'm coming up short on a Overdrive Function... :(
This seems to be a pretty common issue, actually. A couple of key things to remember is that the Overdrive is a "big"effect, but it doesn't need to be catastrophically powerful. An Overdrive could be based off pretty much anything... A 'bruiser' themed Overdrive might be something like:
*Being able to take damage from other suits and apply it to itself, while granting itself greatly increased regeneration for a short time.
*A 'super-saiyan' buff, increasing damage, endurance and speed for a small window of time.
*Damage reflection which trades damage current taken and turns it into an affliction on a target.
Or... Worlds of other stuff. An option is too look at magic in established stuff - look at Dungeons & Dragons spells (probably levels 7 & 8 for an Overdrive) and find something that looks cool and modify it to fit your idea.