Your assumption is correct, both the registry value and the file must exist, and the File Version must match the specified criteria for the rule to return True; otherwise, if the registry value is missing or the file is missing, the rule will return False.
Incidentally, a PreRequisite Rule for the Registry KEY Exists is a great additional check to put on a package like this. In the case where the RegKey is absent (which typically means the product to be updated is not installed), having that quick check in the PreReq ruleset can significantly speed up the detection effort. (Essentially a failed PreReq check means the Applicability Rules don't have to be evaluated at all; only the Installed Rules.)
