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Setting up a crystal report data source

Hope this is the right area to post this....
I have a c#.NET (VS.NET 2002) app that uses Crystal Reports.  The way I was shown how to set up reports does not seem to make sense so I am hoping someone can clarify things for me.  I was told to set up a dataset and put into it the information I need, then create the report with the dataset as its datasource.  Then to read the information in I was told to use the same stored procedure I used for the dataset, but code it into a data class using SqlCommand, read each row using a datareader and set the report's datasource to the stored procedure/datareader.  

Are both of these (the datasource in report setup and the manual coding of the datareader) required?  Does anything programmitically set take precedence over the datasource set when the report was setup through the wizard?  


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Thanks, the links were very helpful.