When is it necessary to have it installed ?

I live in Oregon. The water temp sometimes gets to 70, outside air is normally 80 in the summer time.

Do I need it ? If not, who does (under what circumstances) ?

Are you running a return line back to the tank or are running the return line into the water separator?

I bought some parts from a guy and it included a fuel cooler. Wondering if I need it if I install a blower ?

Not something you have to install but every little bit helps

Where does it mount ?

I would strongly suggest running the return back to the tank and be done with it. It will save you lots of money and frustration.