Non-lock up does not lock at all. Lock up will lock in 3rd and 4th by command of the chip. It will not lock if the a/c is on or at WOT. PTC does not recommend locking their converters at WOT so it would just be used for cruising mileage.
This is not correct. Overdrive will work with a lock up or not lock up converter. Lock up will have slightly less rpms at cruise because it is mechanically coupled through a clutch but overdrive works with either type converter.