Hi,
You can use any version of Mplab with the ICD2 - they are both Microchips own products - but you are always better to use the latest one.
Anything starting with Version 8.nn will be fine.
Mclre , Vpp and RE03 all share the same Pin 1.
Pin 1 is Vpp, program voltage, and only use when you are programming it.
During normal running your Config statement tells the chip to use pin 1 as either Mlcre, the reset pin or as RE03 a digital input port.
I haven't used that software or hardware but your screen shot seems to be showing the window where you can enter the Config data manually.
Think if you leave it blank and then load the .hex code you will find it gets the Config information direct from the .hex code.