Maybe by following this thread as well you might get some answers:

http://www.immigrationboards.com/britis ... 81436.html

British Citizen/Overstayers Waiting time 10years Postby mteja » Thu Jan 22, 2015 9:23 pm Hello All I had an appointment with NCS today for my British Citizenship. I had all my documents, my route would have been either 3years Spouse Visa Route or 5years. Anyway initially i had overstayed my visa in...

You can put unemployed.

Only 90 days of absences are allowed in the final year. The last day of the final year is the day when HO receives your application.
Anything above that and your wife will have to apply for discretion.

Please double check this as I am not sure but I believe "self-sufficiency" and not relying on public funds should be enough for you to be exercising treaty rights.
I also think that now that you have PR it allows you to apply for naturalisation based on 5 years residence + PR.

You have to have been a resident for the last 5 years in order to apply. You can have 450 days of absences in total and no more than 90 days in the final year.

Once you get ILR you can register your child as British.

http://www.immigrationboards.com/britis ... ml#p592355

You might be right and there might be a way for you to have a successful application but for that I think you need to find a good lawyer.

I can not give you a correct answer unfortunately.
My logic tells me that you should have a chance in applying for naturalisation as HO was aware of your overstaying and yet you have been granted ILR.
I would like to hear opinion of other members about this.

Did you notify HO of your overstaying when you applied for ILR? EXPLANATORY MEMORANDUM TO THE STATEMENT OF CHANGES IN IMMIGRATION RULES PRESENTED TO PARLIAMENT ON 13 JUNE 2012 (HC 194) wrote: Re-entry ban 7.19 Currently migrants who overstay their leave to enter or remain by more than 28 days are su...

I think you have to wait 10 years if you have overstayed for more than 28 days.
I need to double check this.

One FPN within last 12 months will not effect application unless it's serious.

Exactly on which date did you overstay?

All the info already given still applies.

1. They must give you a passport if you have submitted all necessary documents.
After naturalisation ceremony you have officially become British citizen and it is up to you to apply for British passport if you need to...if you don't travel you don't have to.

How may days was your wife absent in the last year?

I don't think that they will need it. Once again, if Home Office has doubts they will ask you for further proof of you residence for the qualifying period and that is what matters more than NCS who is acting only as an agent for HO. In that case you would need to prove that you were present in UK fo...

You don't have to prove your residential status when applying.
Your passport serves as proof that you were in UK for the qualified period.
If HO has any doubts they will ask you for further proof.

Does your wife have ILR?
If so, she does not need to have been employed.

When applying under 5 years rule you are not required to be employed.
If Home Office needs additional documents they will contact you.
I would put all the details as it is registered under.

If her passport has just expired or is about to it is fine.
The point is that her passport must show that she is within the residence requirement, meaning to show the days she has spent out of UK in the qualifying period.

The most recent HM Revenue & Customs Self Assessment Statement of Account.

I have insufficient knowledge regarding this matter but my opinion is that you as non-EEA national family member are deriving your rights from the EEA national meaning if your spouse has not been exercising her treaty rights for 5 years than you might not be eligible for automatic PR status after 6 ...