figure files that require the geometries folder have to go in the main runtime?

No. All the files can stay in their own runtime, including the geometry folders. They don't need to be kept in the main runtime.

The only thing you have to worry about are morph-injection deltas (the RuntimeLibraries!DAZ folder, for instance). These will still work in external runtimes, but P5 will look for them in the main runtime first, and it can be a slow process. So, for maximum performance when injecting morphs, keep copies of these folders in your main runtime.

Can direct installs like Daz millenium figures be directed to alternative runtimes and still work?

Yes.