I have several bad contracts for a team I took over and I am tied down by these 3-4 year contracts ($7-9 mil each) that I can't even give them away even if I pay more than half the 1st year contract. What are my options?

Maybe include a prospect in a trade if your league allows it? Just dont release them, you will still pay the salary but someone else could claim them and get them for free basically...better just to waive them and if they clear stash them in the minors

They still have options (most have 2). Can I put them down, bring up, demote again and do that until they are out of options then waive them to see if someone else will take their contract or is that on some unethical line?

Nah, no need to do that....just designate them and if they clear send them down. Options are yearly, not each occurrence by sending them down.

I sometimes just put them on waivers/ designate them near the beginning and end of the seasons as well hoping someone has a moment of weakness and claims them.

Unfortunately if its a solid world you will probably be stuck with them and just have to make the best of the situation. I got lucky a few times and was able to trade them for a bag of balls as new owners come and go in the world...

Play them. Put together a team that will win 70 or so games. Get some draft picks in the pipeline. Do that until the contracts are over. If you're bored, pick up another team while you're waiting for this squad to clear out. Don't throw away prospects in the process.

I'm with opie. Use what you got. Only one team gets to win the WS. If you've got a team that you know isn't, what are you using it for? While you're plotting how to assemble a run with younger talent, accumulate some data from your existing turds and see how it informs your future process. Maybe you'll work out some waiver dumps or friendly trades and get used to how those work along the way. Any team should be about making you a better manager, not just executing a blind teardown. Any fool can do that.