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Beersmith IS a tool, and a very adaptable one. You can set you mash profile to anything you'd like. No sparge, batch sparge, mash out and batch sparge, etc., etc. Pay no attention to it's defaults. Go into the equipment and mash pofiles and set it up to work the way you want to do it.
Nope, it really doesn't have anything to do with modification. It's becasue in batch sparging you get to a boil much more quickly than in fly sparging. Keep in mind that Beersmith is a toll to help you brew the way you want to brew, not instructions about how to brew. You don't have to use the steps it defaults to. Unless you can't fir all the sparge water in your cooler at once, I'd advise you do do the mash runoff, then all all your sparge water in one step.
A mashout really doesn't matter in batch sparging, and unless you hold a temp of 170 for 20 min. or more you aren't really doing one. I usually use sparge water around 185-190F so that I can be sure I've gotten complete gelatinization and conversion, not for a mashout.
As for tun size, considering my 48-quart cooler can be a bottleneck for really big beers, I recommend the 10-gallon at least.