When spreading ballast in a youd is it correct to balast between the tracks? These tracks are close together so there is no space for a service road etc.
Yes. Generally speaking, there's not much space between the tracks, so it is just going to be all ballast. Plus, there's a use in having the overall yard as level as reasonable and not full of bushes and stuff, so there's that. In my experience, this holds true in big yards and small yards, busy ones and quiet ones, yesterday and a long time ago.
https://goo.gl/maps/XHA6bYqUUmS2 This is one of my favorite spots to train watch (not on the bridge though!) and it provides a pretty good visual of "yes."
Great photo! I'd go for making the yard look dirty and gritty. You see that shown clearly in well-made yards.
Most yards have very finely ground ballast or the ballast has been worn down with much use. The ties are usually to the point that they are almost completely covered. For HO scale, you might want to consider sanded grout and for N non-sanded grout. It is very fine and once you spread it, you only need to add water. Plus a box of the grout is $10-$12 and you would have enough to do about 1000 scale miles of track. A lot of yards have varying colors from light brown to gray so you may want to get two or three boxes of varying colors.
Hope this helps.
Robert