A first important point: the elements of $\Bbb Z_n$ are not integers, but equivalence classes of the modulo $n$ relation. Some texts write these elements as $[0],[1],[2],\dots, [n-1]$ to emphasize they're equivalence classes (and hence sets of integers), where $[k]=\{x \in \Bbb Z: x\equiv k \pmod{n}\}$. In other words, the equivalence class of $k$ under this relation is the set of integers that leave a remainder $k$ when divided by $n$.
So you have $[a]=[b] \iff a\equiv b \pmod{n}\iff n \mid (a-b)$.
On these equivalence classes, you define addition as follows:
$$[a]+[b]=[a+b].$$
A way to become familiar with the operation is to check that it is well-defined, or to check that if $[a]=[c]$ and $[b]=[d]$, then $[a+b]=[c+d]$. (Try to check this, because the proofs of the group axioms are pretty much entirely based on the operation.)
As an example let's look at $\Bbb Z_3=\{[0],[1],[2]\}$.
Here $$[0]=\{\dots,-6,-3,0,3,6,\dots\} \\ [1]=\{\dots,-5,-2,1,4,7,\dots\} \\ [2]=\{\dots,-4,-1,2,5,8,\dots\}$$
We can write out the multiplication table (dropping the brackets for legibility):
\begin{array}{c|ccc}
+ & 0 & 1 & 2 \\ \hline
0 & 0 & 1 & 2 \\
1 & 1 & 2 & 0 \\
2 & 2 & 0 & 1
\end{array}
The table tells you that $[0]$ is the identity, and $[1]$ and $[2]$ are inverses. Note that $[1]+[2]=[1+2]=[3]=[0]$, where $[3]=[0]$ because here $n=3$.
Now, let's look at your proof.
a) Associative Law: First, assume that n is a composite number and that $a,b\in \Bbb Z$ such that $a=nx$ and $b=ny$ for some integers, $x$ and $y$. Then $a+nx+nx=n(x+y)$.
Is there a reason why you're assuming $n$ is composite? $\Bbb Z_n$ is a group also when $n$ is prime.
In your proof, by assuming that $a$ and $b$ are multiples of $n$ you're actually assuming they are elements of the equivalence class $[0]$, because $[nx]=x[n]=x[0]=[x0]=[0]$.
What you're required to show for the associative law, is that for three elements $[a],[b],[c]$ of $\Bbb Z_n$ (not integers, but equivalence classes) you have $[a]+([b]+[c])=([a]+[b])+[c]$.
The proof should follow from the way the operation of $+$ is defined for these equivalence classes and from associativity of addition of integers.
b) Existence of Identity: Generally, when showing the existence of an identity we can use this information for addition : a+0=0+a=a.
I am unsure how to insert the modular portion of the definition into the existence of this identity. I realize that for addition, we generally look at 0 (rather than 1 for multiplication).
You want to show that $[0]=\{x \in \Bbb Z : x \equiv 0 \pmod{n}\}$, the equivalence class of all multiples of $n$, is the identity of $\Bbb Z_n$, or that for any $[a]\in \Bbb Z_n$ you have
$$[a]+[0]=[0]+[a]=[a]$$
This also follows from the definition of the operation: $[a]+[b]=[a+b]$.
c) Existence of Inverse: I need to show that for each element $a\in \Bbb Z_n$ that $a^{−1}=−a$. Again, I do not know how to insert the modular portion of definition into this aspect of the proof.
Since the operation here is addition, not multiplication, the inverses should be the negatives: try to show that the inverse of $[a]$ is $[-a]$ and that $[-a]$ is an element of $\Bbb Z_n$.
(I can give more details if you need them.)
Best Answer
Whether or not you include 0 as a positive integer is largely a matter of convention - I think most people would say "no".
If you don't include 0, then you are correct that the absence of an additive identity means it's not a group.
There are also no inverses, as you note, whether or not you include 0.
The answer given in the book should have read "There is no inverse for 1", not "There is no inverse for -1".