Hey guys - Mr. K here.
The Sponsored Links you are seeing are actually just ads that have already been there in one way or another - you just may have not noticed them before because they were sized and positioned differently.
Part of the reason you see ads for things you have been searching for recently is because you have tracking cookies on your computer that tells Google (among other companies) what you have been searching for. They then use that data to send you targeted ads. Pretty smart concept really and I suppose that is why Google is #1 at what they do.
Regarding site sponsors - yes, we are working toward that. We have to pay to keep the lights on in here!