what does FD (flight director) do as opposed to AP?

If you go into FS2004 Menu, and go to Learning Center, it gives you a very detailed explanation of what all these things do. Just go to Autopilot or something, I can't remember the exact name.

FD is a vertical and horizontal axis on your Attitude indicator that indicate what path the airplane would be doing if Autopilot was engaged.

Actually, the flight director is a bit more than just an indicator of what an auto pilot will do if engaged.

The flight director is a sophisticated instrument that provides considerable information about the current flight regime (attitude, rate of turn) and also provide an easily understood set of visual guidance about what flight movements to execute to stay on a heading, altitude, attitude, or approach when the aircraft is being hand flown.

Don Wood wrote:

Actually, the flight director is a bit more than just an indicator of what an auto pilot will do if engaged.

The flight director is a sophisticated instrument that provides considerable information about the current flight regime (attitude, rate of turn) and also provide an easily understood set of visual guidance about what flight movements to execute to stay on a heading, altitude, attitude, or approach when the aircraft is being hand flown.

Yes, and all that movement, heading, altitude, etc... is all indicated from what the autopilot would be following if it were engaged.