Re: Can you keep a townie "prisoner" indefinitely on home lot?

Yes that is possible.

You might need cheats to do it like buydebug. I'm not sure.

The jail might not work exactly the same as the one in the police office.

Even with the base game you should be able to hold an Sim between 4 walls, by either not placing a door, or locking the door for them with them behind it.