Do I need to subtract room/board AND scholarships from the amount we actually paid for college tuition? The block says to include scholarships......confused

Yes, you would deduct Room/Board and Scholarships from the amount you paid for Education Expenses.  The credit you you receive is based on expenses you paid yourself for tuition, books, and other required fees.   This could be paid with cash, credit cards, or loan proceeds.   

You may have a 1098-T showing the Amount Billed or Amount Paid for tuition, and an amount for Scholarships/Grants, which TurboTax will calculate for your credit amount when you enter your 1098-T into the program.

You can add Books or other Required Fees that you have documentation for in Additional Expenses.

Here's more info:

https://ttlc.intuit.com/replies/3301953