To use a NX account, do I first need to create a system account with the same name?
Yes, there should exist local or network account with the same name.
Can I configure NoMachine to allow AD users to authenticate with their AD credentials, but then they view the currently logged-on user, which is a local account?
Yes, enabling Users db and adding AD users will allow only them to login to Your host. If You doesnt enable Nx Password db, then NX will login them using their AD credentials. To enable users db, set following key in the server.cfg:
All added user which aren’t desktop owner, trusted or administrator – would require the approval of the desktop owner. The desktop owner also can allow or forbid the user to interact with the desktop.