1) Yes, I believe you need to buy it through Netflix, make an account, and then you'll input your information onto your 360 and link the two.
2) I believe that feature was postponed 'till next year, and you're going to need to have everyone with both XBL Gold and a Netflix subscription in your party to view the movie.
http://www.gamespot.com/news/6199698.ht … bj=6199698The delay of Xbox Live Primetime follows on from last week's delay of movie-sharing from NXE's set list. Another feature announced at Microsoft's E3 2008 press conference, movie-sharing was taken off the table last week when Xbox senior strategist Rob Gruhl said to MTV, "If we wanted to do movie sharing, build an app, party enable it, drop it in. Really, it’s [the new dashboard] just laying the foundation for our next wave, our next step. Continuing to fill it out, continuing to build it."
Clarifying Gruhl's statement, a Microsoft representative later told GameSpot that movie sharing won't make it into the upcoming dashboard overhaul, but will be one of "a lot more exciting features" coming soon.
But hey, atleast it hasn't been completely canned...we'll just have to wait another few months.