I've been told it doesn't ferment out. Does it add points to the OG and FG?
Yes it will add to both since it won't ferment with normal yeasts. It is a sugar so it adds to the OG just like any other sugar, but since it is not fermenting, it will increase the FG just the same.
pppg is points per pound gallon - or if you add 1 pound to 1 gallon you'd get 42 points in this case which is a gravity of 1.042 In 5 gallons of wort, this would be 42/5= about8 or +.008 to OG and FG
I'm curious where you got that 1.042, Beersmith has it at 1.035? I just did a milkstout and it appears it added closer to your source's number (maybe slightly more).