When the "group" file does not contain any user name entries does that mean any user can be in any group?
As far as I know it means that no user is currently added to any group, so it's sort of the opposite of what you were asking.
if user names are entered for a group does that mean only those user names can be associated with that group.
It means only those users are currently associated with that group.
I wanted user nobody to be in group staff in addition to nogroup so I added it and user tc to the group file staff group entry
That's probably not a good idea. The user "nobody" is a special user made available to be very limited in what it can do, for use in things such as web servers to prevent remote access from obtaining control of things outside the server. Nobody probably shouldn't be allowed to do anything apart from accessing files allowed for "others" (the 4 in chmod 664, for example)