I just took over a D-III school. My season just started. Should I play the players I recruited over the SIM players on the roster? Or should I play the best players and try to win games?

I would say play the best players you have, try to get wins. More wins equals better vision, better vision lets you see better players to recruit. I wouldn't say stick at Div 3 for too long though, unless thats where you really want to be. Move up as soon as you can.

You have taken on a horrible d3 team. That can be a good thing.
Although I would rather see you do it in d2 or above where you can at least learn the use of Advanced settings. They can make a big difference in how your team does things and how you enjoy the game.
A horrible team can be a good thing because you can learn how to build a winning team from nothing. And if you make mistakes with a bad team, how much can it hurt them since they already suck :).
PS: I was the guy who had your d2 team before you took it. My alternate ID is Cryptkeeper :).