Goodness me - this site now only gets a decent legal question like this around once a fortnight.
I'm going to pass on your first 2 questions, but mainly because I don't see how whether it is a 'dispute' or not changes anything. Your neighbour is making a claim against you and you are working out how to respond.
I think you have a realistic claim to a prescriptive easement but I am a layman with some previous experience of these things, not a lawyer. You clearly know the basics of these matters because of the terminology you are using, and since the pipe has been there over 20 years, the situation satisfies the minimum period of time.
The best advice I can offer you is to register with this website
http://swarb.co.uk/phpbb/viewforum.php?f=19
and post your question there. This site is far more professional on legal matters and is answered by real lawyers with real question. They will point you in the right direction and help clarify the facgtors - not give you a free legal opinion.
Regards, BM