Randy,
You've got the basics down pretty well. To answer your question, you would usually not distribute your forms or PRG's as they are in the EXE. Many developers will distribute reports though, as it makes for easier distribution of updates. If you distribute your reports, be sure to exclude them from the EXE.
One warning though about the idea that the distribution tree is what will end up being installed at the site. If you use any ActiveX controls, you have to put their OCX and DLL files into the root of your distribution tree, even though they will end up in the user's SYSTEM or SYSTEM32 directory.
Hope this helps.
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