Your confusion is actually related to ALL detection spells, and the answer is in the defining characteristics of Detections Spells. First couple of sentences of the description for the spell classification on Page 285.
Detection spells give the subject a new sense (beyond the normal five) or improve a sense the subject already has, for as long as they are sustained. Detection spells may be cast upon yourself or on another subject within touch range.
The subject (the one receiving the information) of Detection Spells can either be the caster or a person touched. The range for that selection is Touch. The range of the sense
is the next couple sentences.
The standard range of the sense a Detection spell grants is the spellís Force x casterís Magic in meters as a radius from the target of the spell. Extended-range detection spells have a Force x Magic x 10 meter range.
Analyze Device is a standard (non-Extended) range Detection spell. Therefore the statement of "a device or piece of equipment within range of the sense" is actually referring to within Force x Caster's Magic in meters.
So, your number Two is close, you just need to go to the definition in Detection Spells to get how the limitations for choosing the device are set up.