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Your friend wouldn't need Fallout 1st but you would need to be there; otherwise, the server would drop.
Edit: I believe private server is limited to a total of 8 players.
In short, you CANNOT progress the story together unless you do them over with the other person being the quest taker so both players have the same progress.
Also, (and this might be wrong), it could be there are a couple of quests where single player is enforced, but it's possible I'm thinking of another idiotic coop unfriendly online game system. It's been a WHILE since I slogged through the story quests, so someone else would need to clarify on this.
The first part though is correct.
It just so happens that the ability to create (restricted to 8 players) private servers is one of them.
As others have said, you can play coop as far as the game allows without paying extra, interaction with others is minimal and usually amounts to an emote and then at worst, and then they are gone again.
PvP is PARTIALLY optional in the game... if you do every event, some are pvp but they can be done passively they just force you to see other players as hostile
Base building is ish
one of you can build a base and if you are in a private team (no team benefits) they can build on and do stuff at your base, but it will be either or players base
You don't need any of the stuff mentioned by the others.
You can just go to the official game servers, and good chance you won't even see other players. Any you do see will probably turn and immediately leave the area. The rest will be so far away, they might as well be on another continent. There are few areas like the workshops that are open PVP, but you just stay out of those if you want. And you turn on pacifist mode. It doesn't keep you from being hurt, but you can't hurt others even by accident. Which means they have no avenue to engage in pvp with you.
But seriously, you won't run into many players, and 99% of them don't want to run into you either. They'll either serverhop or just fast travel away from you.
If for some reason a players starts following you and annoying you, all you have to do is log out and log back in and you will server hop.
And the rest of the stuff is just whininess from nolifers who play this game 24/7 and nitpick every single little thing they can. It's a broken record, and just ignore em.