What if I did not report my land contract sale originally as an installment sale, but claimed the interest as income as seller-financed mortgage interest.

Yes, you may report this as an Investment Sale. 

Because you have previously reported the interest income but not the principal payments, you will need to adjust the sales proceeds for the missing income. Also, since you have not recognized any portion of the gain/loss while receiving payments on the land contract, you will report the entire gain/loss this year.

The sale of an investment home is reported under the Investment Income area of Wages & Income.

1. Choose Federal Taxes >> Wages and Income, then I’ll Choose What I Work On.
2. Investment Income >> Stocks, Mutual Funds >> Start/Update.
3. Type of Investment: Everything Else
4. Enter a description, Net Proceeds PLUS principal payments received in prior years.
5. Acquired: how this property was acquired
6. Cost Basis: original purchase price plus closing costs
7. Date of Acquisition: date you purchased the property

TurboTax will determine if you had a gain or a loss on this investment and determine if it was short- or long-term. If you have other capital gains, a loss will offset some or all of the gains. Otherwise, up to $3,000 of the capital loss will go to line 13 of Form 1040 and offset other income. The remaining loss over $3,000 will be carried forward each year until used up (applied to capital gains and/or ordinary income). If the sale resulted in a gain, it will be taxed as capital gains.

This wouldn't be picked as a second home?  I put the numbers in and it seems like a large loss as I made $28361.03 when I sold the home via realtor on 6/15/2016 and the added principal payments totaled $13913.40 for the previous years (total amount of $42274.43).  House was purchased for $149000 on 8/6/20015.  This is the summary:
Capital Loss Carryover from 2015     $0  
Total Gains/Losses Before Carryover $0  -$106,726    
Net Losses     -$106,726  
  
       
Capital Loss used in 2016 What's This?     $3,000  
       
  
Loss Carried Forward to 2017 What's This?     -$103,726

Is this correct?

Yes, you may report this as the sale of a second home. However, a loss on the sale of a personal use asset are not deductible. As long as you did not use this property as a residence or vacation home, the allowable loss can be deducted this year and carried forward until used up.
Your calculations appear correct.

Does the net proceeds include what we took home plus what paid off the mortgage at the time of sale?

Yes, net proceeds is typically the sales price of the property. In your case, it would be sales price plus prior payments received. The mortgage payoff is not included when reporting a property sale.