When Installing A Package Via The Admin Panel It Gives You The Option To Edit Other Custom Themes. Does That Mean That I Would Not Have To Manually Edit The File?
Also If The Mod Edited This File:
./Themes/default/languages/Modifications.english.php
Would I Need To Manually Edit That For A Custom Theme?
1) It would mean that you could avoid manually editing that theme, although only if the edit for the custom theme is successful.
2) Only if the theme does not have its own 'languages/Modifications.english.php' file.
See here (http://docs.simplemachines.org/index.php?topic=402) on how to install mods manually. You can also go to the mod's download page and right below the download links, you will see a submit button for manual install instructions.