As long as the version of your character in the thread is the same as the one you're applying for. If you're playing an AU version of the character in the musebox/DR when you're applying for OU, we won't accept it.

At the game start, yes, it's all located deep underground and they're certainly allowed to stay with the rest of the group down there. Due to the nature of the game though, it's very likely they won't be able to stay there forever and will have to pack up and find somewhere new.