I have been reading the rules and I'm not seeing the answer to these questions, and I'm feeling kinda stupid that I can't.
1. When the rules refer to the Courtyard, what is it referring to? Is it all the buildings? It seems like it just starts talking about the Courtyard with no introduction whatsoever. Is it the area with the compass on it?
The compass area. There should be a graphic explaining what each part of the board is.
2. I must have missed this, but do you discard the minions back into the bag once you use them to create catapults seige towers, etc?
Out of the game.