You have to put a sell order ONLY to 'square off' your holdings in equity.
You can do a 'square off' for F&O and also for intraday trades by just clicking on the square off button.
About your second question, if you are long 200 (quantity) at Rs. 100 and you intent to short 50 (quantity) at Rs. 95...
You will hold a total position of 150 (quantity) bought at Rs. 100. And you would have exited 50 (quantity) at Rs. 95. You wouldn't have any short position. You would still be long 150 (quantity).
You can see all this information in your 'Admin Positions' (F11) window!