You've mentioned spending 1 month outside the Schengen area for my 4 months travel. Will the 2 wks Morocco - 2 wks Greece (in between) - 2 wks Turkey work or the entire month / 4 weeks have to be consecutive and spent outside?
No, the 4 weeks do not have to be consecutive. You can come and go into the Schengen Area as much as you want, but the total time you spend inside the Schengen Area must not exceed 90 days.
Personally I cannot understand your reluctance about driving in Europe. I don't see any problems with it as long as you got a driver's license that you use regularly at home. A car is a car after all. But it is your decision. What really bothers me is that (to offset the high cost of rail travel) you decided to do couchsurfing and that by choosing rail travel you forgo the budget option of camping. I really hope that you have the resources to stay in hostels or pensions instead of couchsurfing - if you don't I advise you against taking this trip.
I also feel that you overestimate the comfort of public transport. Don't forget that you have to carry all your luggage with you. At 11 your son is a bit young to be carrying all his stuff in a backpack, so you'll probably end up with a large backpack on your back, a rolling upright suitcase with his stuff, a small backpack for him with books and other things to keep him happy and a tote for you that holds the things you normally carry in your purse. Have all that on you and change trains several times - and you may wish for a car. (Especially if there are delays or changes of tracks and all the announcements are in the local language only and your son just about had it and decides to act up right this moment.)
About the first leg: After cutting it down you are left with Berlin, Prague, Budapest, Vienna and Munich, is this correct?
For these connections I would use the special offers available from www.bahn.de. Berlin-Budapest is available for 49 EUR one-way per person if you book in advance. Berlin-Prague can be had for 19 EUR. Vienna-Munich can be done with a few tricks that involve special tickets that are only valid on regional trains, with this it would cost you about 30 EUR for both of you to get from Vienna to Salzburg and another 30 for both of you from Salzburg to Munich. Budapest-Vienna is available for 14 EUR per person if you buy the Euregio-Ticket from the Wasteels office at Budapest keleti pu.
I also hope that you add in some more places - you are hitting 4 countries, you should try to see more of them than just big cities. In between Berlin and Prague is Dresden, which is really worth seeing too.
Cannot help you much more with the Eurail pass right now, because your initiary is still a bit too vague. But Rick Steves has a good tutorial to getting the most out of a Eurail pass, see www.ricksteves.com/rail. But note that he only compares the price of the Eurail pass to the prices of the regular train tickets - he completely ignores special offers for train tickets as well as the option of long-distance bus tickets and flights.
But as a general rule it is cheaper not to use a pass in Italy. And in Spain and Greece you are more likely to be using the bus than the train. Am I right in assuming that you will be skipping France? Then you might get away with not using a pass at all, provided you can grab a bunch of special offers from www.bahn.de
BTW, if you are coming in from the USA you should be flying into one of the Western European hubs like Frankfurt, Rome, Madrid, Vienna, Paris or London etc instead of Istanbul. Chances are it will work out cheaper because there is more competition on these routes. There are also very cheap flights between Germany and Turkey because of all the Turkish people who live in Germany. In October/November you can usually get flights to Turkey for about 70 EUR one-way.
