I seem to have two Applications folder... The one inside the Macintosh HD drive, and the one inside my User folder. Is this normal? I haven't been experiencing any problems, but I was not aware of this. If it is normal, what purpose does it serve?
Normal. Sometimes applications with an installer create the folder inside the Home directory. Adobe does that for example. MRoogle will show you dozens of threads about this though.
You should only have one in most cases. Are you sure the one in your user folder isn't just aliases of the one in Macintosh HD? Does it have different apps in it, or are they all repeated?
It's empty. There's no harm in deleting it and no reason to keep it. If you install an app that's for the current user only, it will re-create the folder.