You're not asking for much, are you? 
I'm not aware of any software that meets all of those requirements.
Afaik, only Winboard and Arena will allow illegal moves (with the correct setting changes).
I know that Chessbase (and Fritz) and Scid vs. PC GUIs can insert colored squares and arrows into the annotations (and maybe Lucas Chess, I'm not sure), but I don't think either Winboard or Arena can do that.
I don't know about the hi def display requirement.
Hi
I'm reading a chess book and I want to follow it using a board. I find that software specifically designed to be friendly to this aim is quite lacking.
Please let me know if there exists a piece of software which meets these requirements:
The chess board shall have options to create, edit and manage PGN files with the full PGN specification supported
The chess board shall have a 'sandbox' where anything is legal including multiple moves by the same player and this shall be able to be saved outside the PGN specifications (if such moves violates the specifications)
The chess board shall allow annotations such as highlighting squares and drawing lines from squares and pieces (allowing the saving of such annotations if it falls outside of the PGN specifications)
The chess board shall support hi def 'Retina' displays (or equivalent)
The chess board shall preferably be a standalone application (as opposed to browser based)
The chess board shall be well designed and offer a range of 2d colours and pieces which are not too bright or overly textured
The chess board shall be system agnostic
Thanks