"I'm guessing, because your question is unclear, that you are having trouble because either the music that is telling you to play with a capo on the first fret is still referring to the chords by their shape than by their capo-altered key. If that's the case, when it says to play an "E" or a "D", it merely means to play that shape -- thinking of the capo as the nut (such that the second fret is now the first fret)."

I think that's the answer. If the song is written in, say, Eb, the helpful arranger will tell the guitarist to capo one fret and play a D. That means play as if the key was D, but with the capo providing a "new nut" that changes the pitch by a half-step.

If the music calls for an E/D chord, however, that's a different kettle of fish -- it means an E chord with a D in the bass (effectively an E7 with the dominant 7 note on the bottom).

For those not sure what key to "play" in when capoed, the point to remember is that the capo RAISES the key, so an "F" key can't easily be played in a G formation (you'd put the capo on fret #10 to do that). Always use a letter lower than the desired key, then raise the pitch the required amount to reach your pitch/key goal.

And yes, when using multiple guitars, playing one in capoed position can be a good way to avoid clashing chords and muddy sound (assuming you have guitarists that can play well together, that is).

Bob