[Suicide Junkie]

The more tests I run on the this the more I get to the conculsion that for fleet combat less armor or even no armor and all weapons is the way to go. What am I missing?

Weapons and engines do add quite a bit of bulk to ships. Weapons contribute to both offense and defense, and are thus especially effective.

In comparison to the minimum 460kt of hitpoints on an LC, a few pieces of armor don't have a whole lot of impact.
Also keep in mind that you should subtract 10 points off the strength of armor, since if you don't put armor, there will still be 10 hitpoints from whatever else you put in there instead.