Does 68W ALC Phase 1 (AMEDD DL) need to be completed prior to attending phase 2?

Not necessarily, you would need to be granted permission from the Commandant, or his/her representative in only special cases. Once granted permission, then you will be notified that you will NOT receive a DA1059 or be considered course graduated until you complete the course in the designated time.

No but you have to complete it by the time you graduate phase 2.

Reference what MSG (Join to see) said. He was my Senior SGL at SLC at Sam.