Two things confuse me about this. First, the tools I want to use are not listed under the list of tools with dependencies.. but I still need to install? what is the difference then between tools with dependencies and all the others?
If I understand you correctly, here's the answer: tools with dependencies require additional tools in addition to the base tool (e.g. tophat requires bowtie and samtools in addition to the tophat binary).
FYI, looking back at your original email, the fasta-formatter that you're missing can be found in the fastx toolkit:
http://hannonlab.cshl.edu/fastx_toolkit/index.html
The tool dependencies wiki page has been updated to include this information,
Second, in the instructions it suggest that nothing should be listed under the tools when you do a local install... (the instructions I was reading showed screen shots indicating that you configure each tool and it appears in the left hand menu)... when I did the install everything was listed (just not functioning). Is that normal?
The instructions you found are not accurate. Galaxy still comes with a large list of tool wrappers, which are used to populate the list of tools in a local installation. The distinction to make is that the wrapper enables Galaxy to run a tool, but the tool must still be installed before it can be run in Galaxy via the wrapper.
In the future, we'll likely have Galaxy versions without any tools previously installed as well as versions that include all the tools on our public server (and perhaps other installations for particular analyses, such as RNA-seq and variation analyses).
Good luck, J.