I gave a listen to a few of the LF files. The L stands for Lich. So, you are correct that M and F stand for Male and Female.
On the Dark path, the final promotion for your Sorcerer is to Lich. So, that character's icon (As well as their paper doll base) also changes to that of a Lich, to reflect the change.
The female lich's response to the rude merchants (Example: "Thanks for nothing, Moneybags!") is one of two answers: either "THAT was rude!" or "Doesn't anyone have any manners anymore?!"
By the way...my story is going to have BOTH pathways; once I get to where I need to make the decision, I'll make it a sort of "Choose your adventure" type. So, I'll have something like "If you want to follow the Light path, continue to the next chapter. If you prefer to follow the Dark path, skip to Chapter XX." Because, whenever I play MM7, I always make a save when it's announced that Judge Grey passed, then I'll make a second save for the dark path. I like some of the Dark Magic spells, but the cons outweigh the pros on the dark path.