Balk?

I can't site you a rule, but it has always been my understanding that rubbing dirt directly on the ball is a no-no.

Rule 8.02 (a)2. (foreign substance)
But it looks like the penalty should have been a ball count, not a balk, for first offense.

The "one foot out of the box" rule was put into effect a few years ago to speed up the game, but I think it was changed back at least 3 or 4 years ago (it wasn't widely enforced when it was in effect, if I recall correctly.) Unless it's a local rule I think the strike call was wrong.

How can dirt be a foreign substance though, what happens if somebody hits a ground ball? I could understand it if it was spit or something, but dirt is a part of the game. Am I wrong?

No, this is not a balk. If this was done by the pitcher, it could have been a violation of 8.02.

A pitcher may not:
2) Apply a foreign substance of any kind to the ball; (3) expectorate on the ball, either hand or his glove; (4) rub the ball on his glove, person or clothing; (5) deface the ball in any manner; (6) deliver what is called the "shine" ball, "spit" ball, "mud" ball or "emery" ball. The pitcher, of course, is allowed to rub the ball between his bare hands. PENALTY: For violation of any part of this rule 8.02 (a) (2 to 6) the umpire shall: (a) Call the pitch a ball, warn the pitcher and have announced on the public address system the reason for the action. (b) In the case of a second offense by the same pitcher in the same game, the pitcher shall be disqualified from the game.

But this was done by the catcher which should have been a "dont do that" and move on.

PONY league instituted a one foot in the box rule a few years back to keep the "mini Nomar Garciaparra's" from strolling out of the box and delaying the game. The penalty for stepping out of the box was a strike. The rule died out a few years ago. Since then I have heard of local leagues using this as a speed up rule.

As far as the batter stepping out of the box with one foot, this usually indicates that the batter wants time, but he has to ask for it AND be granted time. I had a situation a couple days ago, I was on the dish and the batter stepped out of the box without asking for time while the pitcher was in his motion. I let the play continue and called a strike. The coaches were p-oed but I didn't grant his hitter time. Just my 2 cents.