1) I am assuming the settings.js file under the \var\config\app\install\development\settings.js file is the one I am supposed to update?
If you have not installed an app from DeviceHQ, that is correct.
2) If the location of the setting.js file mentioned above is the right one, I am assuming this is protected from firmware upgrades?
This file is not overwritten by upgrades. The only field that gets overwritten is the listen port for Node-RED.
3) When I make changes to the settings.js file, do I need to restart the node-red application or is there a file watcher setup by node-red application that would cause the node-red to restart on its own? If not what is the best way to restart node-red?
You should restart Node-RED. There is an init script “/etc/init.d/node-red” you can use to restart it: /etc/init.d/node-red restart
Jeff