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What is the difference in the rule book provided in the 2 player battlebox (Khador vs Menoth) and the rule book that I could buy separately? Are the fiction stories included in both?

The mini rulebook is just that- a mini rulebook. It completely lacks the fluff and unit entries and contains only the rules. And it fits in the front pocket of a battlefoam bag perfectly.

The content in the mini-rulebook is the same as the rules section of Prime. The fluff, basic unit entries and hobby guidasment are not included in the former even though the latter has them.