that othello rules.. NOT reversi.. in reversi you have to start with none on the board.. Hope I am not over stepping my bounds by answering for him here

Reversi is the same as Othello.

I have always been told the two differences are.. Othello you start with 4 pieces in the middle of the board placed for you.. Reversi you must place them yourself which u get to choose one of two ways to start the game

The only differnce is Othello is a trade marked name and can't be used here. Even the rules page here at Brainking says it is the same as Othello.

And which of the two combinations should I use for the startup?

I would take a vote maybe..If you have it already set up with the 4 in the center then you have only one option to begin the game. The way you have it set up now you can begin play one of two ways and I am sure it had a huge difference in the outcome of a game.. I could be wrong but would like to hear from the experts as I am certainly not that.

It would not matter which is on either side. The options after setup is the same

you can have two set ups.. diagonal or side by side.. am I wrong on this?

The diagonal is the only set up listed in the rules. Normal play is black going first. There is no advantage which goes first.

On the internet there are several sites under Othello rules. It seems the 1880 rules for Reversi start with a empty board and a set number of 32 men. The first four men are still laid diagonaly. Modern games of Othello are pre set up and use a pool of men so you wont run out.

Personally I like the option of how to start. Its only a couple of extra moves at the beginning and its nice to be able to choose the initail layout of the four centre stones. Especially with three different size boards. On the smaller 6x6 I like to start with the pieces diagonal, and on the 10x10 I like to start with them side by side. I have no preference on the 8x8.
I say leave it as it is, and the player can then decide for themselves.

ditto

double ditto

That sounds reasonable.