Nato have already said it's not their war, so no chance they will enter, unless Russia invade a Nato country. An yes they will watch Russia take Ukraine, as unfortunate as it is, they will then keep a very close eye on Russia's next step. Russia will not invade a Nato country, as they realise the consequences of doing this, Nato would decimate Russia in more ways than 1.
As for a no fly zone, agree with above, that this will hinder Ukraine, as they will have no idea who is up there, where as now it's only going to be the enemy forces, so can shoot down almost anything in the skys.