fable as an mmorpg? xD
I could fill a library with games that are better than WoW, but on topic.
Fable 2 has unconfirmed online play. Couch Co-op is confirmed. Word around the campfire, and what we are guessing is that you will be able to invite friends into your fable world with them coming in without dogs and it will be possible for them to kill things and destroy things of yours (we are hoping you can toggle that option

)
Character classes? somewhat. In fable 1, your class was left to imagination. In fable 2 class could mean either of two things.
1. your class could refer to your job. jobs will be seperate from quests as far as gold is concerned so you could define your character by his trade (bartender, asassin, blacksmith etc.)
2. your class could refer to your characters stats build which as far as we know has not been announced to change.
Your question about customizable armor is a dificult one. It has not been confirmed, but there have been pictures of very diverse heroes, i doubt i've seen the same clothing twice. Also, getting the "perfect" armor will be a little more difficult. you will need to do your job to earn gold as well as play the story, and they added much more armor of many different types so it is possible that the armor will have more properties than just "strength" as it was in fable 1. you may need armor that augments magic (clothing has been confirmed to be augmentable).
I hope that answers your questions well enough. I do not hold onto links but i think at least most of that information was correct. if anyone has anything they can fill in that would be great.