"As they approached the house, they noticed a light on upstairs."
In this sentence, the word 'upstairs' is used as a noun or adverb?
Does it mean that they noticed a light which is on, and the light is upstairs?
Do we say 'he is on the upstairs'?
To answer your third question a little more specifically, I'd say "he is upstair."
. . . and please state that you are not a teacher, kiwi man.
He is upstairs.
I'm not a teacher, but I write for a living. Please don't ask me about 2nd conditionals, but I'm a safe bet for what reads well in (American) English.