Are receptacles protected when downstream from ungrounded GFCI?
Absolutely, as long as you place the load wires going to the downstream receptacles onto the LOAD terminals of the GFCI receptacle.

A GFI does NOT need an equipment grounding conductor to function properly. In fact, using a GFI at the beginning of the circuit is what will allow you to legally and safely use 3-prong receptacles downstream. Thing is, this does not create an equipment ground for equipment protection for things such as surge suppressors.

By code you are supposed to label any non-grounding downstream receptacles "No equipment ground present".