To the second question the short answer is no. The encoders go to the drive not the computer, which will be off if you are using it manually.
Once again, as many have posted before me. There is no need to "go manual". Once you get comfortable you work pretty fast with no "manual mode" using things like MDI and jog. You also gain the benefit of power feed like this. There really is no reason to take great pains to "go manual" as it gives almost no gain. You may be more comfortable now with a manual machine, but it will quickly wear off.