I dont have this game but I can answer some of your questions for you.
Yes, updates will be downloaded via Steam.
Steam has its own backup feature which is quite good and easy to do. What you do is install the game from your DVD, it will install Steam at the same time.
Create an account on Steam, the game will then update.
When using the Steam backup feature, it will backup your game with the new updates etc included in the backup. It will give you the option to choose what size files you want to create so that you can store the backup files on either multiple CD's or 1 or more DVD's.
Those backup discs can then be used to re-install your game, you will no longer need the original DVD for installing as all the files (including all updates) will now be on your created backup discs.
Another way to back up steam games easily is to just copy the entire steam folder to another location, if formatting your system you then just reinstall steam and copy the moved Steam folder back to its original location, start steam and it will do a small 'repair' and again reconize your game. This saves burning them to CD/DVD's.
And lastly, most Steam games do 'not' need the original Disc in the drive to play.
As for needing Internet to play, since I do not have this game I cannot give you an answer for this as I am not sure what type of game it is, if it has a single player element or not? Most steam games DO require an internet connection to play tho because in most cases you need steam running to be able to play.
Do not be afraid of Steam tho, its harmless. You can also use it to add friends and to easily play with friends online.
