breach of immigration law during qualifying period

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1. Yes
2. Yes
3. That depends on the status of your EU spouse at the time. You said you got spouse visa and ILR. These are obtained using UK immigration rules which means you wife had ILR/PR when you applied. Is that correct?
4. Employment is not a requirement for naturalisation.

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OK. You are now using the correct terms. There are slight differences between spouse visa & ILR and EEA national family member & PR but it is not crucial in your case.

Once you got married to a EEA national (exercising treaty rights), you became legal in the country even without asking for a permission from the HO so point 3 is covered.

Once you have obtained PR, there is no need to exercise treaty rights any more. It doesn't matter if you are EEA national or not.

As I said, for naturalisation employment is not required. If you are self employed, the HO will ask for some documents to verify your taxes are in order as part of the good character criteria.

Clear case of abusing the system.

1) you should have never been issued ILR as you were not married
2) you used marriage just to stay in the country after already over staying

i would have deported you by now why we put up with this in England when so many people follow the rules and pay through the nose because of people like you abusing the system i will never know