Okay, so after I add it to my first account will that share in the membership or will I have to cancel and resubscribe on the second?

Nope, only your account that you purchased a membership for is a member. Like I said, you need to make or use a different account, then add it in the Character Select screen.

Well, my question then is this;

My account us upgraded, so if I make a new account in this manner, will I still have my membership or will I have to pay another 20$?

You basically input different accounts in the Character Select screen. Then it's you choice if you can just click a character and play or click then input the password.

One character per account, you can make as many accounts as you wish

That's it? Supposedly AQW allows five character per account

Just make another account and login
It will remember your name and password

1 account per login. the multiple character selection which is an option allows you to link more accounts for easier access

I logged in, enabled character selection in my settings, logged out, and in the character  selection menu I clicked on make a new character

But then it just took me back to the login screen...

Do I input a new character name along with my password?

How do I make a second character on my account?