i am confused about how to implement the "movement" script you posted last into diamonds.fla...
If you got one set of diamonds to work exactly as you need it to, then you probablyo don't need my movements script. You just need to make a few more sets of diamonds. The purpose of the movement script is to provide a general purpose way of getting any variable (or set of variables) to change from A to B over time. It's a useful tool to have in the arsenal, but if you don't need it, you don't need it.

do i include everything in moveFunction (new) into moveDiamond (old)? or do i keep 2 separate functions?
I was hoping you would be able to incorporate the ideas in the movement script into movediamonds (not two separate functions), but it's probably not easy.

For me, the key to doing this kind of animation is a) thoroughly understanding what the sin/cos functions do (the earlier scripts) and b) being able to manipulate variables over time using a value that goes from A to B over time (the movement script). Understanding both of these things is crucial for successfully combining the scripts.

played with it almost all night and couldn't get it to work.
It's tempting for me to just hand this one to you on a plate, but I'm gonna try to resist, cause you'll get more out of it if you accomplish it yourself.

When I was learning to use a very complicated analog synthesizer years ago (the Buchla 200 system), my teacher said something very useful about experimentation. He basically said that it's good to play & experiment, as it often leads to interesting sounds. But it's also good to alternate this with another method, in which you start with an exact idea of what you want, and you work towards getting there in a very systematic way.

Experimentation is good, if it leads to understanding, but blind experimentation can just needless complicate things and make them harder to understand. The best experimenation is systematic experimentation.

The key to playing with a script is to make sure you understand as well as you can before you start tweaking it. Then, if you don't understand one variable, play with just that one variable until you understand it. Always make small changes and if the results are counterintuitive, figure out why, rather than changing it.

also, each individual diamond symbol is a movie clip...should i assemble the rest of the diamonds i need (20+) in the same layer or should i create a new layer for each set of 5 to control stacking?
Either method works. It depends on how you created your first set of 5. If you are using attachMovie or duplicateMovieClip in a loop, then you can create a few more loops and just keep incrementing your depth numbers.

If you started with all 5 diamonds on the stage, then it's probably easier to create new layers (but don't fall into the trap of putting a different script on each layer - keep your script on a single 'script' layer).