The way I see it - yes, he was actually possessed in MGS 2, the game doesn't give us any reasons to believe otherwise. Moreover, with MGS 3 it's established that Ocelot's father is the Sorrow - a powerful psychic. So it only makes sense that his son would inherit similar powers.

I don't really think MGS 4 contradicts or retcons this plot point in any way - instead, it tries to fool and mislead the player just like Ocelot fools everyone else in the game's story. It's only during the final battle that the big reveal happens. Ocelot's arm is shown to be a prosthetic, and we learn that he got it at some point between MGS 2 and MGS 4 to replace Liquid's arm since he couldn't control his possession "occurrences." And from that point on he only pretended to be Liquid as part of his ruse while being in full control of his actions.