Question: If the mind cannot exist without a body and has to reincarnate straight away, and if the next reincarnation is dictated by the acquired habits of his mind, how can we make any progress in the next life? The acquired habits of the mind will keep repeating and the next life will be similar to the present one. In the version I had been told previously, the soul at death is greeted not only by family members and friends who had passed away before but there are also teachers or guides who help review the past life and understand mistakes. The soul therefore has extra knowledge when reincarnating and starts the next life with the understanding needed to change acquired habits and progress.
Your doubt is genuine. However your fear is unfounded. Everything is a passing phase. Even if the nature of acquired habits of the mind is bad for a while, it is not going to continue forever. The consciousness of the soul has already resolved how to go back to the Divinity. Somewhere it shall feel guilty or sad and unknown imagined guidance and Masters come to its life when birth happens. This is an automatic Divine activity which will see to the evolution of the consciousness. Sometimes it may be delayed and sometimes quicker, but it happens. In every life an opportunity is given and somewhere consciousness picks up the thread. No need to worry... The same thing is said as symbolic of friends, family and teachers coming to guide when death happens. At the time of the death, the mind itself becomes a teacher and when birth happens, accordingly family, friends, teacher come into one's life.
Question: Regarding my first query, I am not sure I understand it fully. Does Baba mean that at death, friends, family and teachers do appear to the departed soul in order to make him understand things he needs to understand before he reincarnates, but they are only his imagination and are symbolic of the Divine helping the Soul? Is it the same with family, friends and teachers in this life, only figments of our imagination, symbolic of the Divine's presence, here to put us through the experiences we need to go through in order to grow? Also, does Baba mean that, at death, the mind becomes the teacher?
Yes, you are right. It is the mind and that is connected to the Divine which helps in different forms. Guru, God, Self all are the same.