There are two LMIA options, one with the fees and other without fees - which one would apply to me? Please give me your opinion what should be the best course of action for me?
The one without fees is strictly to support a PR application. The one with fees - good for a work permit (as well as PR). So it depends whether you need a new work permit in the near future.
With free LMIA, I can't start working until I am awarded PR? But how does that work, I am currently employed. To do that, do I have to apply for another position for my employer? Please correct me if I am wrong.
Free LMIA would have no impact on your current work permit. If you are currently authorized to work, you would continue per your work permit.