The only files you need to install to main memory (which does refer to RAM and not to the built-in drive) are the "PlecoDict.prc" application program and the handwriting recognition data files. Everything else can be installed in the built-in drive or SD card.
And all of the flashcards are indeed combined into a single data file - it's normally called PlecoDict Flashcards, but since Palm OS doesn't allow duplicate filenames, if PlecoDict detects a "PlecoDict Flashcards" file but can't open it (due to file corruption or something similar) it leaves that file intact and creates another file called "PlecoDict Flashcards" with a number (the number of seconds since January 1st of 1904, if you want to be particular about it) appended to the end. So if you see multiple flashcard files, the one with the largest number on the end of it is probably the one your flashcards are stored in, though it might be a good idea to back up the other ones before deleting them just in case it's not.