If you have Xbox Game Pass Ultimate Account, Can you still redeem Ultimate game pass?

Hello to all the good people on the planet (Earth).

I know it might be repetitive question and may have already asked by others, but i couldn't find the specific answer for it so asking it here.

First of all let me state that i don't have any Xbox subscription, I have always played via CDs but now thinking of changing.

I have 2 months free XBOX game pass from a friend in codes.

I then have the offer to get the XBOX Ultimate Subscription 3 months for $1 as I am a new user.

Here are my questions,

How should i procced here to be able to redeem my friend's code and get the 3 months offer. Should I first register for three months and then redeem codes? will those codes give me extra 2 months on the top of the 3 months for $1 ? Or use the codes first
and then get the $1 for three months offer? But with the second option won't I become an existing user if i use the codes and won't be able to get the offer of 3 months for $1?

Secondly, I have so many CD games installed in my 5TB HardDrive, Will all these games change to Digital and won't require any CD in the future for running? If that happens what if I cancel my subscription, will i still be able to play via inserting the CD
again or there will be some updates to them that the CD won't work anymore and then i have to re-install and lose all the saves.

I do understand that in some cases the titles are different and once you installed via digital won't work with CD, but I am talking about already installed games from the CDs.

Many Thanks in Advance, and Happy Holidays.

BEST

RB

:)