Sorry but I've searched around and can't find a direct answer that I understand to this question. Once I've got this new Evox dashboard or whatever on do I need to run the games off the hd or does that allow me to run em off dvd-r?

Dunno, don't have DVD-r

But, if you were to sign the default.xbe and any .xbe file that the backup might use with XBEdump, and burn, and point evox to the d-drive, should work...