Also, if I try to stop the service from said putty session (the one that the output is being sent to, I get this error:
* Stopping Puppet Dashboard [2012-08-20 09:42:21] ERROR SignalException: SIGTERM
/usr/lib/ruby/1.8/webrick/server.rb:91:in `select'
I did find, however, that if I start the service with:
puppet resource service puppet-dashboard
ensure=running enable=true
The dashboard will start and inventory will work even when puty is closed as the output is no longer sent to the terminal (since puppet started it and not my root instance)
The problem is solved, but I am still curious how to detach when using the init.d scripts.