the includes/configure.php content you posted is missing the HTTP_SERVER and HTTPS_SERVER lines. I assume that was either intentional or just a copy/paste error.

The settings for your admin side use DIR_WS_IMAGES as 'images/' but your store-side configure.php has it set to ''

I don't understand this statement:
(The image url is how I want it to display both images on my server and hotlinking images)

And this one suggests you've had some problems, but you don't mention "what" the problems were:
I had installed Image Handler 2 and had to remove it due to errors.