I'm having trouble understanding the options under settings > DATA should I change reddit source to Teddit? Or should I configure redirect manually in Privacy enhancer?
No this is fine; version 2 is in maintenance mode, and version 3 is technically stable, it's just not as polished as a release version.
What you're getting with V3 is more services, currently Reddit and Lemmy.
Regarding your question, there are a few things to know.
Originally, Stealth supported a few Reddit sources: the original API, web scrapping using old.reddit (for when API was rate-limited), and Teddit for more privacy. So when you chose either of those, requests were made using that source.
V3 was launched along with the Stealth API, to which all requests from the app are routed. The source selection was updated to be compatible with Stealth API and was working fine at first.
Then, old.reddit started to block bots and made web scrapping almost impossible (especially when using an IP address from a VPS). Also, Teddit was deprecated and most of the instances are now dead.
So technically, the mechanism still works, but not with the official Stealth instances, nor with the provided Teddit instances.
I recommended sticking with the official Reddit source, as it is the most reliable one.
Regarding Privacy Enhancer, this is different thing. When enabled, and when a service is configured, it will redirect external links to a privacy-focused frontend, but only when you click on a link in the comments of a post.
For example, let's say you have enabled PE, and configured TikTok to be redirected to a ProxiTok instance; when you click on a TikTok link in the comments, it will be opened with ProxiTok instead of TikTok.
The tricky part is to find instances that still work.
