Theres an issue. if you already have a character you cant have a upgraded ship on it after you just download it if you already had a old character

You can just make a new character - it will unlock the universe for all existing characters.

With the newest version of FU, you have the option to "Make your own ship" or use the "default" ship. Choosing it just gives me the tier 1 ship. Is there any way to fix this?

You just need to activate it once with a new character. then you can uninstall the mod and universe will be unlocked for existing chaacters.

t3 ship looks like a T1 ship except that it has the hyperdrive unlocked.

I don't think I understand. :/

Also the main questline is still there.

It doesn't remove it - as the title of mod clearly states - optional.

I understand that, but my ship's hyperdrive is still broken even with the mod installed. I'm sure that it's just me being a moron but I don't quite understand how the mod works :/

If you are using any conflicting mod that changes the tech station of the ship - the mod will not work.

Go to the gear on the bottom right o the main menu of starbound to make sure the mod is installed.if it is there and no other mods installed - just "start" the ship and it should upgrade the ship to be available for hyperdrive as well as make your outpost the highest level possible.

The only other mods I have are Frackin' Universe, Frackin' Music, and Frackin' Races.

I don't really know anything about them - like i said it matters on the tech station of the starting ship and if it is a vanillia tech station or not.

I suggest trying it with a vanillia ship or disabling other mods - then use this mod to activate. then renabling other mods.

Alright, thanks for the help. I'll see what I can do.