For the in-store pickup, how would I print a receipt to show proof of purchase? And also, if the item is in-store pick up and I pull it from another location, how would I let the customer know?
If you process the order in Store Manager, you can print out the packing slip as a receipt after having executed the order. Thus, the card would be charged and the packing slip would be the receipt.
If they are picking up and you charge them in-store, you can just UNCHECK the Process Credit Card box and then execute the order normally so that they are not charged again. You would then give them the receipt from your cash register.
If the product is not in the store that they want to pick up at, I would move the order status to Processing, send the customer a note using the E-Mail Customer field, and then hit save/send. I might suggest you have a signature that states, "Thank you for your order. We are in the process of transferring the product to your desired store. We will update you when it has arrived and is ready for you to pick up."