Gandalf showed up in my court and wanted to produce a legendary weave artifact, so I hired him and then I was able to demand conversion (of his religion), and he joined my court. The tapestry wasn't half bad either. I used him as a champion for a while, then gave him a kingdom.

I assume this isn't supposed to happen? I am playing as evil Saruman. Heck, Gandalf even happily gave me his sword and staff with a few artifact demands. I feel like he should be fighting against me.

Also, I chose to side with Sauron at the start, but now that I control basically all of the non-mordor-and-southern-areas, I've been chipping away at his lands, but was some other event supposed to trigger? I sorta just sat around for ages and he would occasionally raid me. Even declared war a few times, which is why I got fed up toadying to him. Not sure if I have some sort of "Win" objective.
Here's an image of Gandalf as my vassal.
https://steamuserimages-a.akamaihd.net/ugc/2117312697849678324/FF398CA76DA2B528587D5775F7779A627BE3AB30/?imw=5000&imh=5000&ima=fit&impolicy=Letterbox&imcolor=%23000000&letterbox=false

Also, since I can't convert any of my counties to "Fallen Istari", I can't become the head of my culture. Which is really, REALLY annoying, because I just want to "learn" trebuchets or bombards, but the game is auto picking every single other culture technology to slowly, oh so slowly research...