What happens when I buy BTC with XRP from the Ripple client? I don't see anywhere in the ripple client that shows my bitcoin address, and I can't recall if I entered it. When I make an offer to buy X BTC for Y XRP, where does the BTC go when accepted?
Ripple operates differently for ripples and other currencies. Ripples can be transmitted between person to person like Bitcoins, while all other currencies operate like IOUs through a web of trust. When your friend that you trust sends you BTC, your Ripple accounts will show you both that they owe you some amount of money. If you ever send bitcoins to them through Ripple, the debt might be lowered, extinguished, or even reversed based on the amount.

If you want to get bitcoins into your Bitcoin address, you will need to go through a Ripple Gateway. They accept Ripple IOUs and pay you with an appropriate currency, including BTC.