You need to turn it on before you begin your session. This is fixed in the snapshots and will be fixed in 0.52. There's no need. Only DOS boxes can do that. Everything else in a Windows system has to play by the rules.
PuTTY contains an option to work around the bug, though.
MAC stands for Message Authentication Code and is a cryptography thing. Because that's not what it's for. So if your application puts up a heavily coloured display and the blue bits are too dark to read, you can use the Colours panel to alter the shade of blue PuTTY uses. But if your application puts up a whole bunch of black and white text, bringing up the Colours panel and clicking on ANSI Green won't turn your text green. Copy and paste in PuTTY works a little like Unix xterm and similar programs.