I just moved up to DI and I have a couple of questions...
1) What position rankings do I need to aim for since I have a bad team?
2) Should I wait till signings start to go after recruits?
3) Should I try to get recruits from my backyard so it costs less money?
4) Should I try and stay away from recruiting battles?

1) likely anyone past the top 25
2) no - slim pickings by that point
3) yes
4) yes

1) IGNORE POSITION RATINGS, just look for solid cores and solid potential (look for players who will be great in the future, the chances you'll pick up someone amazing right away are slim to none).  My current UTSA team made it to the NT on a team that had only ONE player who was ranked overall when I signed him and only about 4-5 who were even ranked in the top 150 at their position.  My starting point guard, who could get drafted, was unranked overall and unranked at his position.  
2) Definitely a big NO.
3) Yes, but keep a list of a few recruits are kind of far away who look like they might slip under the radar.  These kids you can kind of wait until just before signings to go after, because if no other DI team has gone after them, you might have yourself an easy, solid pickup from far away.
4) Stay away from recruiting battles at all costs.  Battling a DII school is probably the only battle you can win.  Maybe another D/D- DI school as well, but your best bet is just to avoid recruiting battles.  And never battle a big 6 team with a very low prestige rating.  You simply don't have the budget to compete, no matter how dedicated you are to landing that specific recruit.

Of  all your questions - I think that the most important is #3.  Don't go recruiting over 200 miles for anybody.  IF you end up in a recruiting battle, your only hope with a low prestige is being close to the player - to offer campus visits and home visits.  Position rankings don't tell you the whole story.  Don't under-recruit.  It looks to me like you are taking over a team with only 1 senior, so this first recruiting year will not be the biggest deal in the world.  Hopefully you will have a good 1st season and be recruiting with more than a D prestige.

Yea, these guys are pretty much on point. This was my first season at DI and I had a D+ prestige, but I think I did great in recruiting. You can check out my recruits here. They have all contributed greatly and none of them were ranked in the top 200 overall. I had to battle for two of them, but if you know how to manage your budget, you will be fine. 

If I recruit that well again, I could be in the NT within a season or two hopefully. 

Also, stay away from SimAI battles. I don't care if you have a C prestige and they have a D-, they will deplete your budget. I almost made that mistake, but you just have to let the recruit go if a SimAI targets them. And I did target some players over 200 miles, but no one over 370. Try not to spend too much on FSS.