I looked through the rules but seem to miss this. Can reanimate arches still attack with ranged if engaged to another unit say the spearmen, or do they need to disengage first than volley?
Range Attack while engaged.
They can only attack if they have the Close Quarters Targeting upgrade.
"65.2 A unit cannot perform a ranged attack if it is engaged."
This includes ranged attacks against the unit you are engaged with as well as units at range. Close Quarters Targeting removes this restriction (see the FAQ on Close Quarters Targeting).