What stats are used to put a enemy in the battle tab. Most of the players I find listed are a lot lower level and I feel like a bully if I attack them.

Any ship in range of your level should appear. Lower level ships usually have less cloaking though, so it makes sense that the higher ones don't show up as often.

So I need to raise scanning to get higher lvl ships to show?

yes, thats what i did and the higher levels show up

I had 3000 scan and it made no difference at all...I had 0 scan on...I had tons of cloak...I had no cloak....I had every combination....nothing...so scan does squat

umm, it doesn't automatically give you a new list every time you change equipment. You can leave your scanning on for however long it takes to roll over (days?) or one-tap some people. The people that use cloak are typically the people that just do missions and spread their rank points evenly and have ridiculously weak ships. Inactive people that don't really even use traps. I still usually see lower levels though. PVP is wasteful IMO. bad xp return, no loot and very little hope of even antagonizing anyone you might be looking for. It is nice to antagonize people, but that is really only possible by circumventing a lot of game features by leaving browser tabs open. The only reason I figured that out is when it became painfully obvious that someone had a tab with me open for over a week when I wouldn't even set traps.