If he were in a unit for ISAF, don't you think he'd, i dunno, have a few guys with him? Most likely scenario is that hes just there, fighting for no one but himself (as the epilogue suggests). Since the Ak is a symbol of underground/guerilla/terrorist organisations due to its availability, is likely that this is the case.
Since ISAF are technologically Western aligned in their preferred aircraft, it would make sense that they'd be using a range of M4/M16 varients, no?
The West has supplied "guerilla" weapons before in the real world, and Pixy's AKM could've been picked up off a dead enemy.
As for Pixy being aligned with ISAF, I can confirm he is definitely working for them in the last cutscene of ACZ, as an adviser or otherwise. Aces at War has the concept art of Pixy's interview showing him wearing an ISAF hoodie.