mySticl wrote, "Basically I want to be able to shoot from a distance where I wont have to be too close to the subject and will be able to get a nice blurred background. That's my main concern ...A good distance away. I want to be able to also zoom in with my lens and not with my feet.. >With my kit lens (18-55mm) is okay for casual shooting but I feel like the ability to achieve nice blurred backgrounds is not that great."
After re-reading your comments and the thread, I've determined that what you want is the ability to throw backgrounds well out of focus. Bokeh is a more-esoteric quality than mere background or foreground blur. The problem you have with the kit lens is that with a small sensored camera and a short focal length lens, the combination produces quite a bit of depth of field. With the kit lens, having only an f/5.6 maximum aperture at 55mm means that, once a subject is 10-15 feet away, the depth of field at that distance range and at f/5.6 or smaller, everything from infinity and closer to XX feet is rendered in "recognizably sharp focus"; mind you I am not saying that objcts at infinity are rendered as acceptably sharp enough to be considered within the Depth of Field zone, but simply sharp enough to be "recognizable" Your lens aperture limits with the 18-55,combined with an APS-C size sensor, means that the majority of your photos have backgrounds that are "reasonably" in-focus. And the only way you've been able to get the backdrops well,well out of focus is by shooting from a close camera-to-subject distance,and having backgrounds that are relatively "far away" from your main subject.
What you want to do has long been called achieving a "blown-out background". That is very hard to do with an 18-55 kit zoom; it can NOT be done at longer working distances like 15 to 20 feet on APS-C.
Welcome to the world of slow consumer lenses shot on APS-C cameras. I recently wrote a lengthy blog post on how APS-C impacts people photography,and your situation is very frustrating to many people. Still, all hope is not lost. When you asked if you could get a full-body shot with the 50mm f/1.8 with an out of focus background, the answer is "somewhat" out of focus. I think you'd find it easiest to buy an 85mm lens or a used 105mm f/2.5 AiS Nikkor, and experiment with those two focal lengths, at apertures of f/4.5 to f/2.5.
With a 50mm on a D40, you will need to be 17 feet away from a 6-foot tall person in order to get a field of view that is 8.16 feet tall, to allow for some space above their head and at their feet. At f/2.8 you will have good depth of field from 15.2 feet to 19.2 feet, a four-foot deep DOF band. Objects that are "close" to 20-30 feet will appear reasonably recognizable, while backgrounds that are "far" behind the 19 foot range will appear increasingly out of focus.
Using your kit lens at f/5.6, the DOF band is from 13.8 to 22.1 feet, or a total depth of 8.35 feet--twice as much as with a 50mm lens set to f/2.8. it might not "sound" like much of a difference, and the numerical or quantitative difference between a four foot and an 8.35 foot deep depth of field might seem like it is not significant, but the qualitative difference is quite significant, especially at short focal lengths like the 18-55 zoom has.
Buying a longer focal length zoom, like a 70-300 would give you more framing and distance flexibility and the ability to get what I think you seek--out of focus backgrounds WITHOUT the need to be really,really close to your subjects, the way the 18-55 forces you to do.
A good lens to look for would be a 105mm f/2.5 in AiS mount. No zoom, no metering, but a long enough length and a wide enough aperture and excellent manual focusing characteristics on something like a D40. Decent bokeh, but not as good as newer,more-costly, rounded-diaphragm bokeh lenses like the 85 1.4 or 70-200VR.