Yeah, I think it's pretty much irrefutable that Romana is a Time Lord.  After all, she "regenerated" in "Destiny of the Daleks", changing from Mary Tamm to Lalla Ward.  But there were other "facts" that substantiated that idea.  She spoke of attending the academy the Doctor did, getting better grades in the process.  She got her "orders" to join the Doctor from the Lord High President of Gallifrey, or so she thought.  It was really the White Guardian in disguise.  On more than one occasion, she identified herself as a Time Lord from the planet Gallifrey.  And, having "tasted" the freedom of exploring space and time, she was reluctant to return to Gallifrey when the Doctor received orders from the High Council at the beginning of "Full Circle, the first of three stories set in "E-Space".

As from what the Time Lords evolved, er, I don't know.  That is likeley something from the novels, the Big Finish audios, or maybe just fandom.  I don't think it's ever been stated in the televised episodes.  (I'm nor disregarding the "extended universe" amterial, but there's so much of it, It's impossible for me to keep pace.)  Then again, if one looks back far enough along our own developmental line, it can be argued some of our "ancestors" were rather "icky".  It's all relative.

Sincerely,

Bill

Tempt the Hand of Fate and it'll give you the "finger"!