1) If there was no earthly authority to baptize after the apostles died, and since baptism is "necessary" for salvation, did all the believers in Christ from 90ish A.D. - 820 A.D. (Mormon establishment), not receive salvation because their baptism didn't count, since it was not done by the priesthood established by God?

2) If the Apostles were the only ones who could baptize, since they were the ones that Christ granted authority to, what do you make of Paul's baptism, who was baptized by Annanias (Acts 9), a disciple, not an apostle?

JOEL - What the witnessing Mormon told you was only partially correct. While it is true that we believe that the authority to baptize was lost sometime after the Apostles died, we can't give an exact moment that it happened. Besides the Apostles there were still other disciples with authority who continued to baptize people, such as the example of Annanias which you mentioned. We believe the Church was established in many cities and that the Apostles ordained many disciples and gave them authority to baptize.
But an apostasy from the truth was predicted by Jesus and other Apostles(Acts 20:29-30, 2 Thes. 2:3, Matt 24:24, 2 Tim. 4: 3-4) and it began sometime after the death of the Apostles as people began to change the doctrines and ordinances of the Church.
Eventually (we don't know when) the heavens were closed and there was no longer anyone on the earth with proper authority to govern the Church. However, God is a just and fair God and we believe that all those during the apostasy and before the restoration of the Gospel in 1820, who did not have the chance to hear the true and full Gospel of Christ, will receive that opportunity in heaven(1 Pet. 3:18-20, 1 Pet. 4:6), and can become a member of God's kingdom. This is why we perform Baptisms in our temples by proxy for those who have died (1 Cor 15:29), just in case they do accept the Gospel in heaven.

JAMES - You said -
"Eventually (we don't know when) the heavens were closed and there was no longer anyone on the earth with proper authority to govern the Church."
Can you please provide a scripture verse for this belief? This is the area I am having difficulty with.

JOEL - Since the apostasy happened after the Bible was completed there will of course not be any Bible scriptures that specifically say this, except of course for those I already gave you predicting the falling away (Acts 20:29-30, 2 Thes. 2:2-3, Matt 24:21-24, 2 Tim. 4: 3-4, Amos 8:11).
Our only other source for this information is from our latter-day prophets and scriptures. For example, when our prophet Joseph Smith asked God which of the local Churches he should join he was told the following:

"I was answered that I must join none of them, for they were all wrong; and the Personage who addressed me said that all their creeds were an abomination in his sight; that those professors were all corrupt; that: “they draw near to me with their lips, but their hearts are far from me, they teach for doctrines the commandments of men, having a form of godliness, but they deny the power thereof.” (Joseph Smith History 1:19)

There are writings from other latter-day prophets who have learned about this from God, but since it doesn't come from the Bible they may not mean much to you.