Sorry this may be somewhat of a dumb question, but when you create a Merged Patch of your current mods, is that the only "mod" you have active for the game, or do you check all them in FOMM and then just load the Merged Patch last?

All of your mods should be checked in FOMM with your merged patch loaded and checked last. Your mods still have to be active in order to load their content.