As per the documentation, to add a processing node to existing cluster you need to install the Gateway on new nodes and Point to existing DB.
The existing Gateway cluster has both MAG and OTK components installed and has multiple custom policies as well.
1. Do the OTK and MAG components need to be installed before pointing to existing SSG Database?
2. How will custom policies be reflected in the new processing nodes?
All supported versions of the API Gateway
MAG and OTK are soloution kits installed in the DB. They don't install actual assertions. When you start the processing node pointing to the shared DB, it automatically gets the OTK/MAG/policies so it does not need to be installed separately.