My understanding is that in Sufism one is initiated into the tariqah by a Sheikh, and that one is bound to follow his rulings. Is this correct? In practice what does this mean?
I think it's more like: the sheikh is a spiritual guide that will, through some a'maal (like reading tasbih, quran, meditation, etc.), help you to become a better muslim. A good metaphor is : to go from point A (where you are) to point B (closer to Allah's pleasure), you can use a map (quraan and ahaadith) or take a guide (sheikh).
But remember that you should follow the Sheikh's ruling only if it's not in contradiction with Shariah...