Do you need a passport to go from NI to GB? Is that even allowed, given they are part of the same country?
Essentially, the whole thing is a massive bodge job. The CTA doesn't apply to non-British/Irish citizens, so what's happened is that they've quietly accepted that people travelling to NI from the RoI can do so if they're legally resident in the State of Ireland. As EU citizens are almost always legally resident, it's been very quietly agreed that RoI-NI travel can be carried out with ID cards. The UK was planning to introduce the ETA to the Irish border, but it's evidently completely unworkable to impose restrictions without having physical border controls at the Irish border and so the ETA is only required if you aren't legally resident in the state of Ireland (!).
So NI residents cannot visit GB if they don't have a passport, even if they travel by boat?
Exactly that, same with RoI residents. It's a bit of a mess, but it seems to be the most sensible solution without actually imposing border controls between GB and NI.
believe photo ID is required in all cases but it does not need to be a passport. A provisional driving licence would suffice for example.
Only for British and Irish citizens. Everyone else needs a passport in the RoI -> GB direction, while EU citizens can use their ID cards when going from GB to the RoI.
It won't look good if Ireland avoids joining Schengen when it doesn't have a good reason.
Ireland won't join Schengen in full unless there's a united Ireland. It's just completely unthinkable to impose passport checks on the Irish border in their situation.
Depending on their nationality some non EU citizen living in Donegal would need a full visit visa to do that journey on the direct route.
It's not required. The UK has agreed that anyone legally resident in the RoI can travel to the UK, including Northern Ireland for up to 2 months (6 months on the first visit).
Personally I would end the Common Travel Area if there is a united Ireland
If there is, then the most likely scenario is that there will be border controls between the two, but UK/Irish citizens will have free FoM between the two countries. Neither the UK nor Ireland is going to suddenly start treating the other country as foreign, especially given the very close connections between the two.