The "off" you are seeing is timeout (time to end of turn) often used in multiplayer games. Martial Law does not need separate activation, military units in cities automatically impose it. Under Monarchy maximum of three units make one point of population content each, fourth unit does not help any more. You need to use other means to make people content after that - building temples, cathedrals, colosseums, making some citizens entertainers, building wonders like Hanging Gardens and Oracle, directing part of your income to luxuries.
It's often hard to get AI to accept peace when you've made him mad to you with the war. To propose it go to Civilization -> Nations menu (or press F3), select the other party, Diplomacy -> Meet. Propose Pact -> Ceasefire and add any other clauses you want to propose, click Thumb up to accept from your side.