It's hard to know because even Joseph thought he was a real prophet to some extent. Even if he knew he was making stuff up, I think he at least partially believed those thoughts in his head had to be coming from God. He described the Spirit many times as "intelligence" or "ideas". The following phrase makes it very clear:

When you feel pure intelligence flowing into you, it may give you sudden strokes of ideas, so that by noticing it, you may find it fulfilled the same day or soon; (i.e.) those things that were presented unto your minds by the Spirit of God, will come to pass; and thus by learning the Spirit of God and understanding it, you may grow into the principle of revelation, until you become perfect in Christ Jesus.” ( Teachings of the Prophet Joseph Smith, sel. Joseph Fielding Smith [1976], 151.)

Joseph also convinced himself that everything he wanted was actually God's will. So, combining that with the thought that anything that God demands is right, it becames obvious how he could be an asshole and feel no remorse about it.

I think Emma had to at least know the plates were made up, but she probably had bought into his rationalizations and believed him to some extent. She probably had doubts and crisis of faith too.

The most strong evidence that she had to know at least something is her interview a little before her death. Joseph III asked her directly if his father had been a poligamist and she denied it. He also asked her if he had used any book in translating the BoM. She said he didn't.

So, she lied through her teeth even on her deathbed to her own son about poligamy. She also lied about him not using any book because it's certain he used at least the 1769 KJ Bible.

She wouldn't lie if she had nothing to hide...