Can someone tell me what's the difference between a .profile and a .make file when it comes to drupal install profiles. Which of these do I need?
.profile files are what Drupal uses when loading installation files. They define what modules are to be loaded, configuration options, initial data, etc. You still need to download all the modules the installation profile may require and go through Drupal installation.
.make files are a Drush (specifically Drush Make) construct that can take an installation profile and other configuration options, automatically download everything in the right place and instantiate a new Drupal instance.
When Drupal first implemented installation profiles, Drush didn't exist; if you wanted to create your own installation profile, you had to do everything manually. Drush introduced the make file to Drupal, which makes setting up the installation profile much more straightforward. Check out the handbook page on packaging a profile on Drupal.org and Writing an installation profile for the Drupal installer for more information.