Hammer - glad you got the definition of MOA. It is approximately 1" per 100 yds. As for measuring the group size I measure the same way as Sabotloader. I measure the outside edge of the farthest bullets and subtract the bullet diameter. So you are basically measuring center to center (which is standard)
Measuring this way - you can actually get a group size smaller than the bullet diameter. (Example: you shoot 3 shot with a 50 cal and the measurement from the outside of the farthest bullets is 3/4". You subtract 1/2" and come up with 1/4" (.75" - .50" = .25")).
Hope this helps.