1. If you make it digitally, it is digital art. That includes using hand-drawn stock. The line only gets blurry when you start talking about things like traditional drawings that are colored and tweaked digitally.
2. A painting requires you to PAINT. This means applying pigment in your chosen pattern to make an image. If you are not PAINTING, then it's not a painting- get it? If you cut pictures out of a magazine and put it on canvas, it doesn't become a painting- same digitally. If you arrange images on your canvas, it's just a digital collage.
Please do not classify digital collage and photomanipulation as 'painting'. It is not.
If you make something with a computer, it is digital art. If you make something with physical media (paint, canvas, hand tools, mechanical devices, etc.), it is traditional art. If you make something that uses traditional and digital at different points in the process, it is called "Mixed Media".
What determines if a work is digital or traditional? The material used or the method used to create said piece?
You used a computer to make it, therefor it is digital. If you painted it on a real canvas with real paint and real brushes, it would be traditional art and the fact that the reference was a digital image makes no difference.
Furthermore, if I use stock images I downloaded to create a scene that resembles a painting, is it now considered a digital painting because of its composition, or is it a collage, because I didn't create a painting from scratch using PaintShop or Corel, etc, etc?
Composition and technique doesn't change anything. If you are using a digital device to create art, it is digital art. It is only a painting if your technique involves traditional painting aspects, such as using brushes and making strokes. If you are just cutting up an image and moving things around, it may look like a painting, but it is not a painting. That is photomanipulation art. [link] As for selecting how to categorize such things on dA, dA's categories are based more on combinations of medium and/or subject. For example, we have Fan Art > Traditional and Fan Art > Digital. If you are not sure where to put something, read the category descriptions or contact the +help desk for guidance. If you edit a photo that looks painterly and are looking for the right category to place it, the subject may be conceptual or surreal, therefor you might place it based on that, rather than whether it's a painting vs. a photomanip. It's up to you what aspect of your art you think defines it.