The best way to write a letter of recommendation is to start out with a formal greeting, or using "To whom it may concern" if you don’t know the recipient. Follow the greeting with 2-3 sentences of praise for the person you’re recommending.
Do graduate schools care if letters are confidential or not? In general, graduate programs prefer confidential letters. Admissions officials say that it displays more confidence on the part of the applicant if letters are "confidential" (meaning you, the applicant cannot see the letter). The Letter Service is required to indicate on the letter if it is confidential or non-confidential.