BuddyPress.org

Information on upgrading single-user WP to WPMU can be found on the WPMU forums.

As far as this question:

I have a good many members and would like to know how to add them as a community member or does this automatically do this on install?

BuddyPress does not do any importing of your existing members. There is a plugin that can help though: https://wordpress.org/extend/plugins/user-import-for-buddypress-all-fields/

I am not sure if that plugin is yet compatible with 1.0.3.