I am not quite clear on the rules for the politics of nations allied to each other.
For example, if the Elves are at war (and the North is not), can Elven units from the Woodland Realm move to the Old Forest Road, or is this a violation of the North's neutrality?
I re-read the Second Edition rulebook, and the answer is at the very bottom of page 35, under the bold type.
Using your example, I thought that if the Elven Nation was "At War" and the North was not, then the Elves could not enter the North's territories.
An "At War" Nation (Elves) may freely move across all National borders. But if a Nation (the North) isn't "At War" he cannot enter any other Nation's territories (with a few exceptions shown on page 35), but can move into territories that are unoccupied.