1. You can use any image format which is supported by the standard Silverlight Image control.
2. I think you should design the WCF service which will allow access a data from your database. You can add any framework element and map shape to the InformationLayer of RadMap from the codebehind using locations from your database, but the design of this type service is outside of the scope of RadMap support.
All the best,
the Telerik team