if I understand it's ini file correctly, all you'll have to do is add a [section] for each of your own libraries, and you should be good to go...
Exactly. Apart from that, many packages (including third party packages) are already included for convenience in fpcup.ini
What is the syntax for adding a package to settings.ini?
If you want to install a package which already exists in the file system how do you specify its location, and whether to add it as a compile time or design package in settings.ini?
Is it also possible to change the unit output directory from the one in the .lpi itself?
I have viewed the contents of fpcup.ini and settings.ini but fpcup.ini seems to be the one which contains options for installing packages in the [FPCUPModuleXX] sections.