There are several STR's on AiR B&B that do not abide this; are they likely operating outside of permits or does the county make exceptions?

Ugly truth is the vast majority of agents out there have no knowledge, conceptual knowledge, or exceptionally limited knowledge in this regard.  

Picking this one back up: Dallas has restricted most short term rentals except for in certain areas as of this past summer. 

There are some exceptions to this but this is the general rule.The $150,000 hurdle shrinks to $75,000 if you are married but filing a separate return.Creating an LLC does not suddenly bypass this.In actuality, you created another filing requirement which your CPA will charge you an extra cost for. 

They put new hardwoods throughout the house except in the 2 bedrooms which has new carpet. 

With you being an out of state investor, I assume based off your Denver location, it is vital that your property manager does their due diligence beyond just getting a rental verification.

It has a typical unfinished basement with a concrete floor and there shouldn't be any reason to go down there except to do your laundry. 

Thank you everyone,  I appreciate all the help except for the first couple responses. 

Here are some things to look out for to help you know who to take advice from when you are just starting out:(Note: There are exceptions to every rule.

this is exceptionally difficult to do.