As you auto-answered, both assumptions are right.
To provide more context, and referring to the AD&D Planescape supplements that inspired much of the D&D 3.X Manual of the Planes: in the Planescape Campaign Setting it is stated that the closer you get to the Spire in the Outlands, the more will high-level magic be inaccessible until you reach the base of the Spire, in which no magic can be cast. This applies to both priest and wizard magic.
In the 'On Hallowed Grounds' supplement it is even stated that Gods use to meet at the very base of the Spire to confer, solve disputes and revisit their power balancing divine agreements every now and then.
It is stated that the Spire is infinite in height. Then Sigil, the City of Doors, is actually at the top of it: a torus which contains the city in its inner surface. Due to the unique properties of this city, which their denizens say it is at the Center of the Multiverse, and the unknown properties aparently bestowed and enforced by the Lady of Pain, Sigil is a neutral ground for parties from any plane of origin in which they can meet and interact, always traveling there through the many Portals that link it to the different Planes.
Thus, the Outlands suppression of magic does not apply to Sigil. On the other hand, planeshifting and teleportation magic from and to Sigil is banned by the Lady of Pain.
If you are interested in learning more about Sigil, I recommend the 'In the Cage' planescape supplement. A worthy reading.