Does either of the two sound unnatural or incorrect when said to someone the night before their exams?
1. Be confident in your preparations.
2. Be confident with your preparations.
Should said/told be used in the first sentence?
Normally you'd say something like 'Believe in yourself. You've prepared. You can be confident.'
If you do use 'preparation', use the singular. You can use either 'in' or 'with' before 'preparation'.
(When I say 'use the singular' I don't mean you can never use the plural. It's just that the singular fits better here: exam -> preparation, party -> preparations.)