2l8m8:
In a Create Object (Duplicate, etc), would you be inclined to include something like a sheath when a PC creates a knife or sword?
Nope. I'm pretty sure it just creates the weapon, but the weapon could be placed in an existing sheath or scabbard and still be considered 'close' enough to the wielder not to disappear.
2l8m8:
Would a suit of armor (presuming the cost is paid, I know it's based on 5# but can't recall how massive it would be for a whole suit) be considered a single item?
Presumably. I know in Grimoire there was an optional rule about combining castings of Create Object and Create Warrior to have the warrior appear fully armed and armored. Expensive to cast, no doubt! But, if your GM would allow
that, then presumably they would allow a suit of armor to be created as a single item.
Also, if you're using just the basic combat rules (not that I've known anyone to), a suit of armor really is one item. :P
2l8m8:
What about, say, a rifle with a scope? Where is the point at which one item is really one item?
As far as I recall, complex things like guns and cars can't be created with the spell. If you do allow guns to be created, though, I'd see no problem including a scope -- or even a tripod/bipod/whatever if needed. The character would need a good working knowledge of the exact weapon they're creating, in any case.