Is it permissible to give zakat to a indebted brother while unaware of the source of his debt, and does ill-gotten wealth prevent one from receiving zakat?

A debtor is not given zakat if he incurred debt for a haram (forbidden) matter, because that would be assisting in sin, regardless of whether he is the zakat-giver's brother or not. If you are not certain that your brother incurred debt for a haram matter, then think well of him and give him your zakat, as presuming the uprightness of Muslims' affairs is the default.