is there any way of having a portable database packaged with a project and if so how would I refer to it without having to mention the specific directory which would not be true for someone elses computer?

Do you think that I would have to set up an installation file that sets up the directory and everything when the program is installed.

Is it perhaps easier to just make the person browse for the actual database file with a browser and simply get it set up that way? this would also help if I wanted the program to be installed on many computers but just one database being used

Any ideas? I am not looking for code here but rather some broad stroke advice to point me in the direction of best practice.

Take a look at SQLite and System.Data.SQLite for .NET environment. If you find it useful for your purposes, the freeware version of OsenXPSuite is a pretty good database designer.