There is a free php script that I downloaded and heavily modified. Is there a certain amount that needs to be edited before I can claim it as my own and sell it? Even if I wrote it from scratch, it would probably look similar. Would there be any legal issues?
Technically, there is no set percentage of modification to get around infringement. It sounds like you have a "Derivative work". Unless you have permission to sell a modified version, it would be best to write the entire work from scratch. Another way to look at it might be that if I got a copy of "your script" and modified it and then started selling it, could you tell by looking at the code that all I did was modify your script?
IMO maybe you try to ask the free php script owner to heavily modified it and then market it. In that way there is no illegal way. but i think if you change the 70% of the script, it will not look the same of course. for me there is no illegality found for it..
That depends, what license was the script released under? There are a couple different ones that allow you to sell the script as is and keep all the money you receive. Look at open sourced files, people use those all the time on their scrpts they make and sell them, legally.