Played MOO2 back in the old days but am a little rusty. Having trouble accessing the ship design section. I go into the production area but the "design" button is dark. Can someone give me a few hints on getting into the ship design area.

Do you have the research prerequisites?

Wait a sec... you should be able to click on the design button after pressing "buy" at a colony with the appropriate facilities. Then click on the ship type (eg "scout).

Maybe you are playing with Tactical Combat turned off? In this mode, CPU are doing this work for you. Attack an enemy - if you get results screen without combat, the option is turned off - you need to restart your campaign and turn Tactical Combat on.