I have read the man for pkgtool, but Im still confused. When you installpkg a .tgz, does it need to be a special .tgz that is especially made for pkgtool? Or can I get any .tgz and use pkgtool to install it? Is there anything else I should know, or any tips for using pkgtool? Also, will it work with .tar.gz files? Those are the same as tgz, right?

Not all .tgz files are Slackware packages. I'm not an expert but I've made a couple of Slackware packages with makepkg, and they are binary files with a directory structure that are copied to your system. Roughly. Someone please correct me if I"m wrong.

Nope.... Your right.

About 90% of all .tgz are precompiled binaries made for slackware. Sometimes you'll find one that is source code... That's pretty rare tho. So basically, you can install any tgz that you find with pkgtool. Whether or not they were made right or even work is another question all together. Thats something you'll have to find out I suppose.

And, no, .tar.gz's are nothing like .tgz's..... .tar.gz's are usually compressed source code that you have to 'configure, make and make install' after you uncompress them... Same thing with .tar.bz2's....

.tgz's are pre-compiled binaries just like .exe or .rpm or .deb.....

You're right, slackware packages are just tarballs with the directory structure of how it'll be installed in the system. The most important thing I guess is the directory structure. I think i've made some tgz's by using tar zcvf .

Another question... how do you all generally install files? What I have been doing is this... it may be way off from the "norm", but I never really learned a set way:

(Assuming its a ./configure, make, make install file)
Download said file
tar -xzvf it, assuming its a *.tar.gz
./configure
make
make install
Move all of the old source files to /usr/src
Move all of the new program files to /usr/bin

Is this the standard convention? Or am I way off?

It's standart except for moving the new program files, when you issue "make install" you're installing them (they're usually installed to /usr/local/bin instead of /usr/bin) so you shouldn't move them to /usr/bin.
Also try checkinstall it makes a package from the sources you compile so it's easier to install and remove it.

Yup go with checkinstall. Since it will turn it to a .tgz before installing, hence it will be easier to uninstall in the future when you want to get rid of it or upgrade it.