Theotokos is properly translated "god bearer". Its use in the early (truly) ecumenical creed was to establish and guard the divinity of Christ, not to elevate or envoke adoartion of Mary. Protestants understand the word in that sense only.
(a) The Gk. word rendered "highly favoured" here (KJV) and in many translations, is "kecharitomene." Catholic Bibles usually translate it "full of grace," which is permissible, and not merely a biased position. E.g., the Protestant Amplified Bible mentions in a note that "endued with grace" is the "literal translation." W.E. Vine's Expository Dictionary of N.T. Words, a standard Protestant reference, states that the word means "to make graceful or gracious . . . grace implies more than favour; grace is a free gift, favour may be deserved or gained."
If this be true, the Catholic rendering makes more clear the Catholic position that (b) Mary's Immaculate Conception is entirely unmerited on her part, a sheer act of mercy and grace performed solely by God.
There is no logical, biblically necessary connection between (a) and (b). "Highly favored", "full of grace", etc. does not translate into "immaculate conception" except in RC theology.
Mary had to be sinless in order to be in such close proximity to God Himself.
Harldy. Jesus surrounded Himself with sinners ever day. Witness the story of the woman with the issue of blood in Matt 9:20. Even though she approached Jesus in her unclean state, rather than her defiling Him as was testified in the law, He made her clean. Such is the power of Christ to overcome sin.
Again, this is another of those logical leaps that is not required from the Scriptural account.