App store shows "download" when already installed.

Why does the app store show mountain lion ready to "download" when I have already installed mountain lion? Do i need to download and reinstall?

Well, because the App Store is only concerning itself with the Mountain Lion _installer_ (which is an application) and not the OS itself.
The OS will be updated via Software Update, as it always is.  Note that in Mountain Lion that Software Updates appear in the App Store application, but this doesn't mean they're actually delivered _via_ the App Store.  Software Updates for non-Mac-App-Store applications are delivered as they always were, just with a different front-end UI.  It can be confusing ;-)

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