"So how can he make modifications without him actually knowing what's been done since they never actually did the Back Step"
Whilst they may not ever have physically activated the machine the sphere itself does go back in time. Any modifications Ballard makes would either take longer than several days to implement (ie Ballard would know what he was planning to do) or Frank could be told/the data stored on the chip Frank takes back in time, and would be able to see from the sphere whether the modification was successful or not. For instance in one episode Ballard makes a modification and several days later this causes Frank to split into good and evil parts. Ballard then undoes the modification as clearly it was not a good thing. "not to mention saying that they still use fuel"
It was hinted at that the fuel exist outside of time as we know it therefore although time goes back the fuel does not.
"Also, how do they get the sphere back and fix it every time, since most of the backsteps end up nasty, or does it exist in their hangar as well. If so, then we'd need to have two Franks aswell."
No like you say Frank and the Sphere disappear at the moment that future Frank arrives (as an aside this is why Frank is confined to the base it wouldn't do to have Frank just randomly disappearing from the middle of a street). However whenever Frank checks in he says where the Sphere is and Bradley replies with something along the lines of we'll send a retrieval team. Admittedly it might have been nice to have seen this, but meh. Fixing it is easy just look at what's broken and fix it like any mechanic does.
"Not to mention if the radius of the "miscalculation" of the target is 200 to 1000 miles like Parker states in one episode, why doesn't the sphere materialize in the ground, or in the air?" It does in one episode it materialises underground, in another it accidentally slices through an aeroplane in the process of going back in time. "Also, if he can go back only 7 days, why doesn't he just re-"go back" another 7 days if he needs more time?" It was stated at least twice that the fuel source needs time between jumps to regenerate. Whilst this might seem to contradict with the fuel being physically used up as well, think of it as they have a limited amount of fuel each time they use it decreases and what remains deactivates, and then slowly reactivates. They can go back, wait seven days then go back again (as they do at least twice) but they can't leapfrog back seven days then another seven. I used to wonder about these thinks as well (especially the leap frog time travel) but then recently I watched them all and gained the above insight. Hope this helps. Andrew