The Hotel located in Montmartre is quite a ways outside of downtown Paris. Should we stay there or somewhere closer to the heart of downtown for those 2 days
What do you consider to be the downtown of Paris? Paris is divided into 20 arondissements, each has its own charm and tourist sites and all are reachable by public transportation-- metro or bus. I do not consider Montmartre to be "Outside of Paris." And if you mean, the center of Paris- the Ile de la cite- that location is good if you are visiting sites nearby. What sites are you going to see in your two days?
The hotel b Montmartre is located in the edges of Montmartre, (in the 18th arondissement) which is a popular area for tourists to visit. You are steps from the Metro (blanche station), which you will use to travel to other sites and to the train (RER) station that goes to Versailles. you can walk up to Sacre Couer and visit Montmartre on your own during your pre-tour.
Not knowing what and where else you are interested in visiting in Paris, I would see if you can book your pre-tour two days at the same hotel. It's convenient, and you won't have to switch hotels.
for a unique experience, I would buy the dinner package for a show at the Moulin Rouge. It's a short walk from your hotel. It's not cheap, but we liked the show and it was a memorable experience. (not for prudes, though)
The other suggestion would be to take a dinner river cruise on the Seine since the RS tour won't do this.
There's your two nights for places to dine.
As for Versailles, do it on your own. - In other words, use the RER to travel out to Versailles, walk from the train station to the palace (follow the crowd) and then take a guided tour from the official website for the palace and garden itself. (purchase in advance) You'll probably spend half a day minimum there. Then walk back to the train station and take the RER back to Paris.
If you are in Montmartre, you will probably want to take Train line L from Saint Lazare
https://www.paristoversailles.com/paris-to-versailles-by-train-rer/paris-versailles-by-train-rer/
Have fun!