Yes you would need a light over the refugium but you can use an inexpensive shop light from walmart with a 6500k spiral flourescent bulb for your light.
You can buy rubble or you can break up larger pieces of LR, it is generally cheaper to buy the rubble but it all depends on who you buy it from. I would use dry sand in the refuge and then add a pound or so of live sand to seed it. Just to be clear live sand needs to come out of an established aquarium from your LFS, online, or other local reefers. The stuff that is sold in a bag is the equivelent of sand and a bottle of prime there are no living creatures in the bag save for bacteria and it is the microfauna that you are looking for in good live sand. As long as the LR is cured you should not see a cycle, if it is not cured or if you buy it online put it in a rubbermade tote with a powerhead and heater for a few weeks to cure it before you add it to an established system. It is usually recommended to do this even if the LFS claims it is already cured.