Fireball (the american heavy walker) has a range 3 flame thrower...

this lets it fire at a model on the roof of a building from 1 square away from the building

if there are troops between fireball and the building when it targets a unit atop the building

does the flamethrower "everyything gets hit" rule kick in?

what about people inside the building on lower levels (but same square) as the one targeted?

According to further clarifications, the flame weapons can only hit multiple targets on the same level. So if it's firing on the roof, it will only hit targets it's able to hit on the roof, not anywhere in between.