Can you create formulas?

Yes, you can create formulas for a report using Formula Editor.

Can you suppress sections of the report?

Report Writer has a "summary report" feature that suppresses all detailed fields that have not been grouped. Also, you can use the Advanced Report Designer to change anything you wish in headers, footers, etc.

Can you parse string fields, such as looking for data in the first two positions of a field?

You can create a filter that uses the "contains" or "begins with" operator.

How do I backup reports and Report Writer's data files.

The App_Data subdirectory of the Report Writer program folder contains everything you need to back up: reports, templates, user settings, and the database containing users, roles, tags, and other settings. Be sure to backup App_Data and all subdirectories.