It's good that you are asking these questions early. From the looks of it you've managed to avoid a lot of the pitfalls most new players suffer from.

Continue as you're currently going - get Kael to level 60, fully ascended, and then unlock his masteries with gems. That'll let you farm campaign to create food for other champs.

You can probably safely leave Spirithost at level 40, and stop leveling other champs when they hit 40. Your farming runs should consist of Kael + three other champs that are not yet level 40. You should stop ascending Spirithost, and you should not ascend anyone other than Kael for now.

With respect to the actual champs you have - other than Kael, they're all trash, so don't level any of them past 40. The ones with the little spinny blue icon are fusion champs. Take a look at the fusion list, the one you want to focus on is Rhazin Scarhide, so keep any of the champs you get that are necessary for that fusion. Don't level them, just leave them in your vault for now. Use the others as food.

Ah, thats what that icon means!  Oops, been sacrificing a lot of champs with the fusion icon

Your on the right track with kael. Get him to six star, full booked and masteries asap.

Spirit host will help early but I wouldn't take her above five stars. You can farm her in campaign to book her if you want.

Also you will want to farm warmaiden and take them to 5 or 6 six stars, and also farm dupes of her to book her out.

Most rares and uncommons will not do anything for you, but starting out armiger a common champion is easy to get and can be good. There are a few rares to look out for as well like frozen banshee, cold heart, coffin smasher, renegade, apothecary, and painkeeper.

You can take someone like sniper to 4 stars to help early and use them as food once you outgrow them.

I need 5 five stars to get Kael to 6.... any suggestions on which 5 to focus on?

Mother Superior I would use as a healer for your group at this stage. She will help keep your team alive  until you get a better healer

It doesn't matter, as they are sacrificed in this process anyway when Kael is upgraded.

Should I save even the 1 and 2 stars with the fusion icon?

You don't have to do that. You will get the 2 star champs again sooner or later from green shards or the market. But keep the fusion rares and above.

Thanks!  Trying to run through hard campain now with just Spirithost/Kael to get 3* and get to brutal to farm

Don't worry too much about doing the 3* thing. You can do it later, and much more easily, when you have level 60 champs.