What is the source for the "Key Challah" Segulah (charm) that is said to bring Parnassah (prosperity)? And which is it: do you put the key in the Challah or do you make the Challah in the shape of a key? I've heard of it both ways.
Until recently I had no source for you other than a mimetic one: My mother (who is of Galician extraction) bakes the Challah on top of the house key.
Now I see in Ta'amei HaMinhagim that the custom is to make an indentation of the key in the Challah (ostensibly by pushing it into the dough and baking it that way).
The next page will also show some reasons.
Ultimately you will see there that the source is sefer Ohev Yisrael.
In my quick Google search on the same topic yesterday, I came across this article with sources: http://asimplejew.blogspot.com/2007/04/guest-posting-by-talmid-shlissel.html
And then this article that argued against the minhag: http://www.alfassa.com/shlissel_challah.pdf
The more common version I have heard is that you put the key of your house in the challah. I have no idea of the source for this (my Litvishe ancestors and I view this custom with a mixture of bemusement and scorn). I found the following article that may shed some light on it:
Re your first question: according to Shelomo Alfassa:
The baking of a key inside a bread is a non-Jewish custom which has its foundation in Christian, and possibly even earlier, pagan culture. At least one old Irish source tells how at times when a town was under attack, the men said, “let our women-folk be instructed in the art of baking cakes containing keys.”
Keys were traditionally manufactured in the form of a cross, the traditional symbol of Christianity, a physical item all Christian commoners would posses in their home. On Easter, the Christian holiday which celebrates the idea of Jesus ‘rising’ from the dead, they would bake the symbol of Jesus—the key shaped like a cross—into or onto a rising loaf. This was not only a religious gesture, but the bread was a special holiday treat. Sometimes these breads were wholly formed in the shape of a cross; other times the shape of a cross was made out of dough and applied on top. In the context of historically baking a key into bread—the key itself, intrinsically, was a symbol of Christianity and by extension symbolized Jesus ‘rising’ in the dough....
In Christianity, baked goods associated with keys are commonly called ‘Easter breads,’ and in Europe they are also known as ‘Paschals,’ as the holiday of Easter in the East is known as ‘Pascha’ or ‘Pascua.’ This is most likely the reason Christians often call Easter breads baked with keys Paschals....
Re you second question, and based on the above answer to your first: No.