When I go to the DMV do they have my picture on file? Can they see it
when I re-new? If so, why do
they need so much too ID me? Cant they just look at my picture on the
computer?

Yes, they have your picture on file.  

However, many people look alike. Some are even identical twins.  Some
are unrelated but look so alike that they could be identical twins.
Some people look nothing like their picture-- they cut their hair,
dyed it, got contacts, had plastic surgery, etc.  Hence, the need to
show ID.