Most of your questions revolev around the fact that the fuel pump you are seeing there on the engine is a two stage pump. There are actually 4 inlet/outlets on the pump if you count the banjo bolt as one. One on the bottom, two in the middle facing forward, and the banjo bolt out the back. The way the pump works is that there is a smalle diaphram pump in the pump that pulls the fuel from the tank, then pumps it through the filter (inlet and outlet 1, if you will) at around 5-7 PSI (low pressure side of the pump) and then the fuel returns from the filter and goes into the higher pressure plunger portion of the pump, where it is pressurized to about 70 PSI and pumped into the fuel galleries in the heads (at the higher pressure that the pump can create). The fuel pressure is regulated by the FPR which actually is on the return side of the heads and bleeds excess fuel back into the system to maintain the correct pressure.
Here is a link to a picture
if that makes it any easier to understand. Sorry the site won't let me attach the picture directly for some dumb reason.
So to answer your more direct questions, yes the banjo bolt has to come out before you pull the pump from the block. In fact, the best way to remove it to avoid the little tappet falling out of the pump and into the engine is to remove everything from the pump and then turn the engine over by hand until the pump pushes up off the block. Then you can pull it up and out.
And also, yes, there is a chance that the low pressure part of the pump is working and filling the fuel filter housing, but the piston side of the pump is bad and can't build pressure thorough the heads.
That's a long, answer for a small question...