Do both MSI files check for prerequisities?

Yes. Both will check that you have the prerequisites and fail if you don't.

The auto-updating MSI does these additional things:

1. Automatically sets the SubscriptionID as a part of the Credosity launch process, so there is no need to do the command line Credosity.msi /passive SubscriptionId=xxx
2. Sets the "autoupdate" to true. This means you get updates without having to reinstall the software. Big win.