Just a couple of questions:
1)How do you get your dog to lay down without touching or pointing inches from the ground?
Are you talking about using a verbal command only, or fading your hand signal so it's more subtle?
2)Also, my dog will only lay down if previously in the sit position. How to I break this?
Have you tried luring him into a down from a stand position? You can also "capture" the behavior by hanging out with him and marking and rewarding when he lays down on his own. Toss the treat just far enough away from him that he has to get up to get it, then wait for him to lay down again. Once you can see he's about to lay down, use the verbal command right before, then continue marking and rewarding for awhile.
3) He will only sit if he is right next to me too. How do I get him to sit when I tell him to sit without coming next to me?
You need to generalize the sit command. Most people train early behaviors with the dog right in front of them, facing toward them, so that's how the dog learns the command. It doesn't realize that sit means plant your butt on the floor no matter where you are in relation to your owner or what you're doing at the time. Start working on sit in different ways - with him in front of you toe to toe, with you sitting on the floor, a chair, or the couch, with him in the car, on the other side of a gate, with your back turned to him, etc. At first you may need to go back to the beginning and use a lure until he starts to figure it out.
For distance commands you could tether him to something a few feet away, so he's not able to come towards you to sit. Expect that he may be confused at first. When he does finally get it, mark it and go to him to reward. Phase out the tether, and simply walk him back to where he was if he does come to you before sitting.