1. Yes. You can walk between cities on the same pieces of land in the east. This means Sturmford/Drangheim, and Thronheim/Thjorgard/Frosgard. You can also walk through tunnels between Thronheim & Yorwick. Some of those journeys you actually have to take. You must walk initially to Frosgard, you must initially go through the tunnels to Yorwick, and there's a side quest to walk between Thronhein & Thjorgard. You can't walk anywhere from Guberland, from Lindisfarne, or anywhere of any significance from the Isle of Ashes. Town Portal will link Sturmford, Drangheim, Thronheim, Thjorgard, Frosgard & Guberland when your magic users are fully developed, and Lloyd's Beacon works as usual.2. There could be a number of reasons for this. The commonest one is that you entered the Keep the wrong way. If you went intially through the main door at the front, you'll probably need to redo it. The way you reset it is to leave the Keep, save your position outside, quit the game, and delete all the minisaves in the Minisaves directory which start AnskramKeep... Then restart the game, reload your savegame, go round the back of the Keep, and enter through the back door. The game likes that a lot better.
BTW, if you haven't already done this, you overcome a lot of bugs by patching the game fully - have a look at the main page via the button at the top of this Tavern.
HTH! 
