I have a tinplate layout on foam and found it a very good base. I power the track with spade connectors at the end of the feed wires coming right up from under the track, so that goes a long way in holding the tack in place. Then in just a few places around the layout I used some hot glue. Never had a problem with it moving around.
I painted the foam board with some "oops" paint from home depot, it was a rather ugly tan that worked well for the a base and cost me $5 for the gallon.
For cutting I have a couple hot wire foam cutters for detail (use a mask and lots of ventilation, this stuff is dangerous) and for large cuts I used an old, large, kitchen knife. You want to cut as clean as possible so you don't leave little bits around.
I used a dull pencil to shape cut stone into a couple walls, then painted with acrylics.
The one thing I regret, and I will be fixing in my rebuild, is that I just used the foam on top of the benchwork. Currently it's only 4' deep so i don't need to climb on it, and it makes for a nice light layout for moving around, but it really acts like a drum, so when three trains are running it's very loud.
There are a lot of samples of modeling that people on the forum have done with walls and rock ledges with foam board. Look around a bit. I download images that I like, so if you ever want a collection of samples, email me and I'll send you what I got.
Best of luck. keep us updated on progress.
Tim