I just ordered Arkham City retail DVD coming from Newegg. I paid a friend cash and he used his credit card to order the game for me. As I do not have a credit card, and I'm getting the retail (non steam) version it seems that the only way I'll be able to get the DLC is through Games For Windows Live.

I have seen MS Points cards for sale at local Walgreens and CVS stores. Is it possible for me to buy the DLC (all of it, not just some) for Arkham City via Games For Windows Live and MS Points? Or do I have to burden my friend again for his credit card?

Check MS LIve's website to see how you can purchase the DLC. I have seen it for sale with Blue Coins on Gamerstag (whatever blue coins are).

So, it could be available a few ways. However, you can buy pre-paid cards at stores to use on Xbox Live. The only issue is buying more points than what you need because of the how they are sold (you need say 1500 but can only buy 2000 points for instance)

Why is this not illegal yet, by the way?

Because you can use the extra points to purchase something else, by adding the unused points together.

Hmm, they have some DLC listed as $ and a very few (like one or two) listed with 'blue coins'. I supposed I should buy a prepaid credit card.