To answer your questions:
Q1: In front just means the location. So in front of the building, or if you park your car in front of your house.
Q2: Hang out in front is not a usual expression...just think of it in two parts. Hang out means to spend time doing something, somewhere (sometimes with others). For example I like to hang out with my friends on the weekend. Or I like to hang out in a certain location...for example = in front of a library.
So when someone says, I like to hang out in front of the ______ (bank, library, school etc). It just means that they like to spend time in a certain location.
I hope that helps!
All the best,