For your first question you can actually tweak the code generation so that DataContract and DataMember attributes are generated for your model. Have a look at these help articles
in order to get you started.
And in order to generate the service code and DTO objects (wcf objects), you need to use the "Generate OpenAccess Domain Service...
" wizard that you can find in the context menu of either an rlinq file or a web application.
Unfortunately we do not currently support console applications as the host of a service, though you should be able to generate into a web application and then just copy paste the necessary code.
I hope this helps and please do not hesitate to let us know if you face further trouble.
the Telerik team