Been signed up as a MS Playtester for about 18-24 months (I think) and have done a few Playtest sessions. Yes, they make you sign NDAs, which covers everything from what game you played, features in the game, what you did during the session, etc. All Playtest sessions are held in their Playtest Lab at MS's Redmond campus.
They got back to me really quickly after I signed up. They'll either call or e-mail you when they have sessions that fit your survey answers. You get a free MS game out of it, so it's cool.