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Would it work if the fax line was not in hunt and the fax line would ring directly to the fax machine?

Yes.

Does the fax machine have to be set up under station 107 or could it be any other station?

If you're programming a line to ring directly to the fax, it can be any extension except 100.

I have a few questions about the fax detection.
Can you use any port for fax detection? i.e. station 107?

How do you need to set CO to ring? Does it need to ring to do the fax detection, or does the voicemail need to answer immediately for the fax detection to work?

I set fax detection to CO1, in system attrib. I also turn fax mode on in the station attrib for 107, I set the line to ring 2 before AA picked up but my test faxes from the office were never detected...I also set hot line on station 107 so it would grab CO1 immediately and dial out.

You can use any hybrid station port. Only one line can be set for fax detection. If it is part of a hunt, fax calls could end up coming in on other lines and they will ring the same as a voice call. The system has to hear the CNG tone in order to ring to the fax station (107), or it will be handled the same as a voice call by the system and ring accordingly.