The quotes/trading by market makers are done by computers in the OTC,correct?
For the most part, yes. I suspect when a large buyer or seller enlists the help of a market maker, it's a little more hands on.
Software or a human being places the quotes on the level II?
Software.
A human never see's or controls the majority of the trades?
Never would probably be a strong word. I would imagine there's some human oversight on the software programs to ensure they're working properly.
Populus vult decipi, et decipiatur
"The people wish to be deceived, so let them be deceived."