I'm not sure what product you are referring to, but the latex version of Kilz (Kilz2) won't work. Only the oil based version will kill a water stain.

Can I paint over the stain with the oil product then over the entire ceiling with a ceiling paint? And yes, it was a latex primer / ceiling pain in one...

Yes. The easiest way is to just buy an aerosol spray can of Kilz, shoot it over the stain and the paint the whole ceiling. This way you don't have to clean out any tools.

ok, I thought I remembered doing that one other time and then when I painted over the kilzed area the kilz bled thru the ceiling paint...perhaps it was just junky ceiling paint. Any ceiling paint reccomendations while we are at it...there is still the Kilz ceiling paint with stain blocker that I could use (after I Kilz primed the stain), there is Behr ceiling paint....I guess I could even just buy regular behr Flat paint...no?

The spot of Kilz may flash some for a while because it will seal that area while the rest of the ceiling will still be porous. So, while it is drying you may notice that spot takes longer to dry. This could show, depending on what ceiling paint you are using, but since it is in a corner it probably won't be an issue.