I've noticed that there is a big market for selling domains on sites like Sedo, and would like to get in on it. However I have a question. I have a domain name registered from 1and1. Would I be able to sell that domain, or would I have to purchase it from somewhere else?

selling is the easy part, transferring is much harder, some web hosts put all sorts of barriers in your way to stop you moving a domain name, a few actively help you with the transfer.
when i transfered a domain from 1 and 1 i had to send 2 confirmation letters by snail mail, plus all the technical stuff, but that was a few years ago