Hi Phil,
With regards to the bridging mode, use the same mode that you are using on the existing wlan that is working.
For the onboard question:
Onboard-controller: The service runs on the controller that has adopted the APs
Onboard-self: The service runs on the device (AP or controller)
In your instance, you want to run it on the controller.
You seem to be missing the radius server policy, this tells the radius server what groups to use, as well as what method of EAP you want to use. In order for PEAP to function, there is also the question of certificates (server side only. it can be a self signed certificate, but your clients won't trust it implicitly).