1. The answer for the first question is the third option. This whole passage is used to introduce us to the setting where the story is set and the historical circumstances that surround it. We are introduced to England at the time of captivity of Richard I, where nobles are rampaging, the Crown is weak and even the greater conflict is on the horizon.
2.The story is set during the reign of King Richard I though he is at the beginning of the story held in captivity. After the end of the Third Crusade the King was captured by Leopold of Austria as he was returning home. To England. Ivanhoe himself is the supporter of king Richard.
