Does this require any additional part? What does the note of "requires retaining ring" mean? Where is the retaining ring required if not already in place with the kit?

The retaining ring are lock washers for the bolts which are required to order for early model E46's with original style control arms. However, the lock washers are included with the bolts. It's noted to replace them as the original ones removed cannot be reused.

I take it this is a kit of two bushings, one for each side?

This control arm bushing kit comes as pictured with two bushings pre-pressed into lollipop brackets and replacement bolts.