What is the approximate time it takes to drive to Sun Moon Lake from Taipei City? And is traffic bad on the weekends heading to there and back? Is there enough to do and see to stay three nights (Fri - Mon)?
TIA
If you leave early Friday morning, you can get to Taichung in 2 hours. SM lake is about 1.5 hours from there.
Staying there for three nights might be a little boring if you only hang out around the lake…luckily you can drive easily up the mountains for great views, as well as check out the town of Puli, which isn’t much but has some really cool hydroponic flower farms…last I knew.
3 days in Sun Moon Lake. You could do a lot worse. 
Getting back on Monday morning shouldn’t be too much trouble.
You can always use the 3rd highway, instead of Highway 1. It’s faster and a better view.
You could stay there a week if you use it as a base. Many interesting places within an hour or so drive. At the lake itself you can bike, walk, hike, take a rowboat out to Lalu island, lunch at the Lalu hotel.
Nearby, in Shuili visit the Snake Kiln, an old working kiln that has been turned into a cultural attraction. It’s been done well.
There are short bike routes in Jiji and Ershui that are nice for an afternoon jaunt. You can park your car in Shuili and take the Jiji branch line train in.
In Puli, I suggest you check out the Chung Tai Chan temple, a massive modern structure designed by the Taipei 101 architect. The nuns speak english and are more than happy to give foreigners tours of the place. Beauitiful marbled floors, decorated vaults, giant stone sculpture, a 7-story teak pagoda, beauitiful ceilings and immaculate gardens are just some of the features worth seeing. In addition, the nuns give a good intro to Buddhist thought, history and art using the temple as their showcase. If you have ant interest in Buddhism this is the place to start the learning.