No. The Reagan Administration was not directly involved in the movement of cocaine to the U.S. and did not sell drugs in order to fund the Contras. US funding for the Contras came from profits resulting in the sale of weapons to Iran that was occurring with the idea that it would encourage the Iranians to pressure Hizzbollah to release Americans held hostage in Lebanon. The NSC under John Poindexter and Oliver North oversaw the sale of weapons at a profit and funneled the excess to the Contras. The idea was that since there would be no loss shown in the books and all the money that was supposed to be present from sale of weapons would be there then no one would notice where it went. This would allow the funding of the Contras to remain secret despite legislation forbidding it.

The Contras were involved in the drug trade, which is where the rumors of Reagan Administration involvement stems from. Like most para-military groups in the region the Contras trafficked and sold drugs to raise funds for their fight. As a result there is a reasonable argument that the Reagan Administration indirectly supported the drug trade, but allegations that the administration directly trafficked or sold narcotics itself are unfounded.

Yes they did. Journalist Gary Webb wrote a book about the issue. The title is Dark Alliance. Also there is a senate report written by John Kerry, current Secretary of State, showing the link between the State Department, U.S. intelligent organizations, and Contras of Nicaragua. Since Congress never approved a budget to help Contras the money comes from the cocaine smuggling were used to fund the rebels.