I'm having brain lock here. THis should be simple and I'm making it difficult.

R1 is on second base with no outs. B1 hits a popup that comes down over second base. Now, I know that the runner need no vacate a base on a fly ball, but cannot interfere. I also know that in an infield fly situation that the runner is not out for getting hit with a popup while on base. However, this is not an infield fly.

If the runner in my situation is hit with the popup, is he out and the ball is dead, or is the ball simply dead and the batter awarded first, or is the ball live? Help please. Oh, BTW, FED rules here.

Since you stipulated FED rules, then it matters where the fringe infielders are stationed. If they're playing "in" to the extent that the ball has "passed" all infielders when it hits the runner, with "passed" being interpreted as further in distance from home plate than any of the infielders are stationed, then the ball would remain alive and you simply play on.

While I am not convinced that that interpretation is the actual intent of the FED, there exists a play in the FED casebook that pretty much "forces" such an interpretation. The actual rule, as I recall, is worded very similarly to OBR's treatment of a runner hit with a batted ball.

In OBR, the ball would be dead and the runner would be out.

Why would this also not be a live ball if the pop fly passed the infielders, then hit R2?

Because in OBR "passed" means "through or within reach of a fielder" versus the FED "string" theory.