Go to your inventory. If you see every single item in the game (from peasant rags to Lordly Plate Armor and unique weapons), the cheat is active.
A: Yes. Capture a lord, ransom them, raid a village, sell prisoners to Ramun the Slave Trader (in Tihr), or do the "Tournament Circuit" (bet 500 denars on yourself every round).
When trying to convince a lord to join your kingdom:
: Hold LB + RT + D-Pad Down simultaneously for several seconds.