TwoSix
Everyone's literal second-favorite poster
Sorry, I was saying "setting prep" more in the lines of "secret notes" about the setting, like information about the yearly travels of the Duke or the disposition of the local innkeeper, things in that line.To answer the first question: HeroWars. Also, I would say, 4e D&D played with the default setting as presented in the PHB and MM. Also, the LotR/MERPish RPGing I've done using Cortex+ Heroic.
This doesn't entail the second question, because in "narrativist" RPGing based around heavy setting prep, the players are in on the setting prep. So they won't declare actions that contradict the setting.
For sure, plenty of narrative games have heavily prescribed settings, like Duskvol for BitD.