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When you make a nandroid, backup system, data, and boot.
Everything else can be left unchecked
Yes, wiping data would effectively perform a factory reset on your device. You would lose all non backed up data (although you made a nandroid so even if you wiped data you have a backup).
I am suggesting you skip wiping data since you are coming from the stock 4.4.2 ROM. You shouldn't have any issues doing it this way, but if for some reason you do you'll simply need to either restore your nandroid backup or flash the ROM file again and wipe data this time.
System gets wiped during the installation process, so there's no need to wipe it before flashing the ROM (although it can't hurt anything to do so either).
At this point, your best bet is to apply the factory image.

Well I did the OTA update and it downloaded and then made me restart my phone, it then actually used TWRP to install the update (KTU48M, 92mb, version 4.4.3). After the update I booted into fastboot and tried to open TWRP recovery but something happened to it I get the little Android dude laying on his back with a triangle in his stomach and inside the triangle it has an exclamation symbol inside "!"..... do it looks like all I need to do is reinstall my TWRP recovery and everything will be good.!? I still have root though and didn't loose any data or settings. I will keep y'all posted. B-)

Yeah installing the full OTA will usually replace your custom recovery (TWRP) with the stock recovery image from the OTA. Typically if I'm updating on stock ROM, I'll just "fastboot flash" the the system and if they included updated versions of the bootloader and radio I'll fastboot them also.
Just reinstall TWRP and you will be back in business.
Gmail sending out emails just fine as of now. If it happens again, try logging in using the AOSP Email client that comes with Android, the one you use to set up accounts other than Gmail ones.
If that works, it most probably some app issue, if it doesn't, then maybe there's some issue with Google's servers.