@ckrusen, I hope this answers all of your questions!
2.When making the RDD, what report type should it be?
I have mine set to SQL Server
4.Do I need to specify a Report Service
No, mine is blank.
5.What Report Type should the Style use? My first guess would be that it should match the Type from step #2.
Yes, I made them match. My report type on the Report Style is also SQL Server Reporting.
6.Now I have to specify a path to the RDL (which doesn’t currently exist in any form)
So now I have to make this RDL from Scratch: Adding the Datasource, Setting the dataset query expressions, Adding fields, etc…
For this one I copied the BAQ Report template .rdl file and saved it in CustomReports with a descriptive name, add the path to the Report style, then did the unthinkable 
and clicked ‘Sync Dataset’ to copy everything to the .rdl
7.Now that the RDL exists with everything required for it to run, I need to add Menu Item to launch the Report. What Program type is it?
Correct, use the Report Menu type and pick the report style name
7b.Did you select the Criteria Set in the Report Style?
