I think the bit about "souls" wasn't intended to be taken literally in a metaphysical sense, but was instead just saying that some part of the person's core personality remains even after a memory wipe. Caroline's personality was an activist, somewhat annoying do-gooder; that's why Echo displays some of these same traits, both during missions and at the Dollhouse. Karl Kraft was a psychopath who liked cutting up people, and wiping his memory didn't change that. This explanation has the added benefit of excusing Eliza Dushku's poor acting - she seems similar in all her imprints because her "soul," her core personality, remains the same.

As to Ballard's joining the Dollhouse: it made sense in context, if you think about it. We know Ballard felt guilty about what he did to Mellie, and it's a safe bet he also felt guilty about what he unknowingly helped Alpha do. By helping the Dollhouse in exchange for November's freedom, Ballard can assuage his guilt on both fronts. Even then, note that Adelle refers to him as a "contractor" - meaning he's there for one specific reason. Namely, to help hunt down Alpha. After that's done, he no doubt intends to bring them down, probably using whatever information he's learned in the interim. This offers him a great opportunity to find out more about the Dollhouse, their clients, their operations... just about everything he needs to know. Of course, Adelle must have realized this as well, and no doubt has contingency plans in place. This would be a very interesting dynamic, if there is a second season.