I have a custom location for my Bitcoin Core directory so I don't waste precious space on my SSD drive.
Is this somehow affecting Armory not being able to update the blockchain?
By the way, under settings, Bitcoin install directory and Bitcoin home directory is too confusing. What is the difference?
Which should I use, E:\Bitcoin\daemon ? or E:\Bitcoin ?
One is where the bitcoind executable is located (installation directory), the other is where your Bitcoin wallets and databases are held. I know it's not necessarily intuitive for users unfamiliar with it, but there's not much we can do to clarify other than teaching users what they are. The wallets and databases are always stored separately, so that you can upgrade the app without touching your wallets, and redownloading the blockchain, etc. The installation directory is intended to hold no temporary data so it can be safely wiped on reinstalls, etc.
In Windows, the installation directory is, by default: C:\Program Files\Bitcoin (maybe (x86)). It will find the daemon directory as necessary.
In Windows, the default location for your home dir is C:\Users\<user>\AppData\Roaming\Bitcoin.
Both of those need to be updated if you moved both. If you're saving space, you most likely only moved the home directory which contains the huge databases.