>So my next question is:  Is the 7th Bit include in the 2's compliment
>and addition?  Or is it just the first 7bits 0-6?
>Next, is the carry by set because of bit position 6 addition or the
>signed bit?

I think one of the problems you are having in getting to grips with 2 complement
is the concept of a sign bit. There is no single sign bit as such.

What makes the number positive or negative is its relation to 0. If the number
is "higher" than half the value that can be held in the memory location, then it
is considered negative, that is it is 0 - number. This why a 16 bit location can
hold +32767 to -32768 (Note the difference of 1 in the maximum values).

In an 8 bit location +1 = 00000001, and -1 = 11111111
                     +2 = 00000010, and -2 = 11111110

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