Do I have to have Bitcoin Core running to use Armory or do I leave it off & check the box to have bitcoind running in the background from Armory?
With 0.96.5 you can start the various binaries on your own, as long as you respect the order:
1st: bitcoind/bitcoin-qt
2nd: ArmoryDB
3rd: ArmoryQt
The other binaries will pick on existing instances.
I have pointed the top Armory Bitcoin install directory to D:\Program Files\Bitcoin
This isn't your Bitcoin binaries installation folder (where bitcoind/bitcoin-qt reside). ArmoryDB needs to know where your blockchain data lives instead. This page explains to you how to set paths for the blockain data:
https://btcarmory.com/docs/pathing