After reinstalling psmon I typed 'which -a psmon' which only lists the following path.
After running psmon as root I was able to get it to search for the conf file in /etc. Apparently when it's run as a normal user it looks in $HOME/etc/psmon.conf. So my only problem left is the 2 background daemons. I suppose this could be normal behavior. When you run "sudo psmon --daemon" does it give you the same message? Thanks for your help.