Am I reading the rule correctly? Will a Spartan Hoplite with medium armor and a normal shield really get an armor save of '8' from frontal attacks and a '9' versus missiles as long as they are in Phalanx formation? When contacted on the flank or rear it would just be a '6' right?

Yes a Phalanx formation with medium armor and a large shield has a 9 save from missiles and a 8 save in melee to the front

You are not going to beat a phalanx with missile attacks. The key is to out flank them with lighter troops. A minotaur in the flank of phalanx is a game winner.

The phalanx can not charge in formation and always attacks with two ranks of spears but never gets the +1 attack rating bonus.

Also remember that anytime the phalanx falls under 12 models it must take a Disc test to retain the phalanx formation. And to form a phalanx you must have a least 12 models and three ranks. So once a phalanx has lost formation it usually can not regain the phalanx formation. And one more thing you must have a Disc of 6 to form a phalanx.

Hope that helps

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Tjaroy the Fist of Ptah Champion of Sobek(SF05), Champion of Amun(TX05), Champion of Bast (TX05), Champion of Bast(SF06) Sasobek the Devouer of the Weak, Defender of Khepri (GenCon07), Champion of Ra(GenCon07)

Actually, yes, that answers my question very well. Thanks for the clear explanation (and the phalanx advice).