There are a number of tools that are common and even some things that you can jury rig but there are some needed specialized tools. Namely a chainbreaker and a freewheel removal nut.

That bike was actually pretty good for its time IIRC. Should have been about $2000 with the OEM groupset on it, mainly Shimano Deore and SLX stuff. Are the cassettes sprocket teeth worn? If so I recommend replacing the cassette and sprocket at the same time (check the front chainring teeth too while you're at it, if they're excessively worn I'd replace them as well).

$250 is a bit much IMO but then again I do my own work and you have the knowledge that the tech who worked on your bike knows what he's doing if you pay him and he does need to eat and all.

The chain and cassette on it now are certainly more budget oriented but there's nothing wrong with that for a new rider. Hell I haven't even gone to the XTR stuff yet it's nice but I can't justify the cost. You don't need to replace the cables but it might be worth it while you're doing all this other stuff anyways (they're dirt cheap like probably 75 cents for the cable and a couple endcaps. and it's easy to replace if you have a screwdriver and a cable crimping tool (specialized tool but you can almost do the same with cable cutters and a pair of pliers if you put pressure on the cap to crimp it)).

Also when you go to replace everything I highly recommend getting a Sram powerlink or KMC Missing Link (I have the SRAM one on my Shimano chain and surprisingly it works). Shimano apparently had a missing link type system for a little bit but there were problems with it and they got out of making them.