In a Karaf .kar file, should the blueprint xml file be inside the jar contained in the kar file OR should it be within the kar file itself.
Also, can a blueprint xml be inside a Karaf .kar file or must it be within the contained jar contained within the .kar?
Karaf allows to deploy plain blueprint.xml files but this is not covered by any standard. The blueprint spec conformant way to deploy a blueprint.xml is to put it into a bundle in the path OSGI-INF/blueprint.
You put the blueprint file into the jar and the jar into the kar.