You need both. I also had to reinstall to mod it, my version is from amazon.
I believe you can combine all sorts of different versions of Arma2, a game launcher might help make it simpler try six updater maybe and I used "ArmA II Launcher" at one point also
When you buy arrowhead it accesses the arma2 files like a map pack and just adds them onto the arrowhead game running
I bought the retail verson bog standard it think when it was released, will it work?
I bought arma 2 on release for the PR mod, over 2 years ago! Since then you also have to buy the arrowhead pack otherwise PR wont work
Its actually worth buying arrowhead because its runs faster and with much better graphics even though its supposed to be the same engine, they did a lot of upgrades
Also there is other packs but none of those have to be bought to run PR. British forces models are included with PR I think
Last I heard was 130 players on one server. They then setup a new 100 player server to split the player load but that filled up before anyone could switch
Never heard of 130 players in any game working out ok so I will be amazed if thats the case