Yes and no. Early Muslims did make depictions of Muhammad. The belief that he should not be drawn predated the depictions and is based on his own statements. In short, there were many depictions despite the prohibition. Which isn't too surprising, people simply reinterpreted the command to prohibit depictions made to worship him and carried on with their cultural practice.

It depends on the era and area. There were a lot of depictions of Muhammad in Iran in the Middle Ages, also in Turkey during some periods of the Ottomans.

Different Muslims interpret things differently, at one point even the drawing of living figures was forbidden.