Hello,

I am not sure how to set-up a launch setting that will ask participants for age, sex, and ethnicity; how do would I do this for the online version of Inquisit 4? Additionally, what exactly do the options for the various user entered preferences mean? So, what do the options under "Choose how subject ids should be generated" Mean? What does the category "Choose how the group id should be determined" Mean? What are group ids?

You don't. You need to either integrate that in your script (see the documentation for surveys) or use some sort of web survey platform prior to directing participants to the Inquisit launch page (see the "How to Interoperate Inquisit Web with Online Survey Packages" topic in the documentation).

See the documentation for the /subjects attribute and its various groupassignment modes.