I downloaded the new version (1.0.0RC2) and compared to the older version ( when it generates the gcode for a simple object, in this case a ring the new version generated the support material on the outside of the ring utilizing the fast and medium configs with auto support from lulzbot.

This is after I cut the material away. It is a simple cutout (capital letter C) and worked fine with the older slic3r version.

Is there a way to adjust the slic3r settings so the support is interior and less noticable after being cut away.

Additional photos, C photo is old slic3r auto support config and the other shows the rectangular piece generated with auto support config on the new slic3r

Try using this version of Slic3r: 0.9.10b to see if the support material is more easily removed. You can also import the model into a modeling program and manually add support columns where ever you like and export the new model. You would then turn off Support in Slic3r.

It may be easier to rotate the model 45-90 degrees when placing them model into Slic3r on the Plater tab. A different orientation may influence how the support fills that area.

I received my 2.0 in November, with version 9.10.56. Is that the same one. This version does a pretty good job with generating support.