Not interested in rolling over to SD-IRA so is it better to pull the funds out now (avoiding increasing taxes in the future) or purchase SFH ($150k or less with cash flow) with hard money and then cash out refi ?

I want you to read this post from the perspective of a flipper and then as a street capital provider while keeping in mind, what has been, the symbiotic relationship that both these rolls have had over the years."

Loan details with pre-qualify from lenders: down 3% ($8250) with 3.2% interest rate.

When possible, we try to get the pics before we make the offer so that we can try to be as accurate as possible on our offer, and if we have buyers we trust, we can start to pre-sale it to them once we have the pictures, to make sure we are offering a number we can sell it at. 

This way I can get the snowball rolling even if it technically is not the best use of my money at this point.

Ask for seller's tax bill and title to provide tax rolls, call the county for the add ons... 

Or would It be better to just sell and roll the equity into our next home?

If not, you need to start saving and get prepared for that and roll into a month to month VS a new term so when you have enough saved up you can give notice.

Let's say I want a house for cheap, so I decide to look for pre-foreclosures.

Sounds like overall you have the right attitude, use the challenges as a way to learn, and keep the train rolling!