NJ/BoC actually activates when put in battle, not in territory. Once it goes into battle with a hero as a site, you can choose at that point to transform it to BoC. Once transformed, you activate BoC's special ability to search out NJ, if you wish.
Regarding your second question, read the identifier between the picture and text box. It will tell you what to do. Typically you choose it to be good or evil (such as King Saul or Joab), but there are a couple of others that do things a bit differently, so just make sure you read the identifier.