How do I show a mortgage principle payment as an expense, and also as a reduction of mort. balance?

One way to do it would be to not set up the mortgage as a mortgage. Instead create an expense category for the principal portion of the loan payment and have the loan payment split between that and the interest category. Then for the loan itself create a liability account with a balance equal to the loan balance. Every month enter a transaction with the category "Adjustment" to lower the balance of the liability account by an amount equal to the principal portion of the payment. The Adjustment transaction won't appear as an expense so you won't be seeing it twice.

Notwithstanding the responses above, which are absolutely correct from an accounting standpoint, there is a way to include mortgage principal payments in a report as if it's an expense. The mortgage principal payment is recorded in Quicken as a transfer from your checking account to your mortgage/loan account. Transfers are usually not included in income/expense reports because (a) they are not technically expenses, and (b) the two sides of the transfer — out from one account, into a different account — cancel themselves out. So what you need to do is customize your report to include selected transfers. (For instance, you can't just include all transfers, because then a transfer to pay your credit card bill would double-count the expenses you have recorded in your credit card account.)

So I'm assuming you want to have a transaction report and/or a summary/comparison report. Click on Edit to configure your report. You need to do two things here. Click the Accounts tab, set it for Selected Accounts instead of All Accounts, and then deselect the loan account. The click the Advanced tab, and in the Transfers section, click the middle radio button for "Include selected transfers with accounts outside report". What that setting means is that you want your report to include any transfers to accounts which are not included in the report. Since you excluded the loan account, the transfer to the loan account will now show up in the report. Now, at the bottom of you report, below all the expense categories, you will see Transfer > To [mortgage account] and the amount or transactions. You can't move this up in the report to be alphabetically within your expenses, but otherwise, it should do what you want: it shows the principal payment on the report, and includes it in the bottom line total.