(I wrote this while you and Mary were posting messages - but you'll see Mary and I say much the same thing in different words. )
Hi John,
I'll try and clarify a few things for you. Sorry if some of this you already know.
First Quiz and Hot Potatoes are two quite separate Moodle activities. It's true that they can create quite similar quizzes but they do it in very different ways.
Quiz is a "native" part of Moodle but is quite complex for newcomers to understand. It works in Moodle 2.0 - though some things need a little polishing.
Hot Potatoes is a quiz generater developed quite outside of Moodle. You can put Hot Potatoes quizzes on any web site, not just Moodle. To create a Hot Potatoes quiz you have first to download the application fromthe Hot Potatoes home page and create the quizzes on your computer. (In my opinion, it's easier for beginners to learn how to use Hot Potatoes than the Moodle quiz.) Then you have to upload your quizzes with the HotPot Module where they will display on your course page and look like this.
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With the name of your quiz of course, not "JCloze standard".
The scores will be recorded in the Moodle gradebook.
It's true that in Moodle 1.9 you can import Hot Potatoes files into Moodle quizzes but I wouldn't recemmend it for a beginner. I don't think that this is working yet in Moodle 2.0
The Hot Potatoes Module has only been available for Moodle 2.0 for a bout 10 days and we "oldies" are still testing it to get the bugs out - though most of it works fine. I would wait a bit before trying to use the Hot Potatoes Module in Moodle 2.0. I don't think it will be long: maybe 2/3 weeks.
In the meantime, you can learn how to use the Moodle Quiz - you can do a lot with that though it may take some time to get the hang of.
Personally, I don't intend to use Moodle 2.0 with real students before September 2011 at the earliest, not particularly because of Quiz and Hot Potatoes but because of all the other problems I read about on these forums. This is true of many applications: only brave souls try out the ".0" version, the rest of us nervous nellies wait for the ".1". But I'll do a lot of playing with it before then off line because Moodle 2 has some great functionalities that I'm eager to try out.
Cheers,
Glenys