The Banach–Tarski Paradox explanation goes along these lines
(1) Take a point on a sphere
(2) Use 2pi/3 rotations to construct a subset of points
(3) After infinite number of rotations you've selected [an infinite] countable set of points on the sphere
(4) For each point not on the set repeat step (2)
(5) Repeat step (4) while there are unprocessed points
Done. [This paradox uses an axiom of choice]
Here is my concern. I am fine with an axiom of choice in the form "for any non-empty set you can always select a member of a set". However, Banach–Tarski Paradox seems to try to do something very different.
It tries to keep selecting points from a continuum set until no more points remain. This is NOT possible. Infinite while loop can only select Countable number of points, while continuum must be selected to iterate over all points on a line or a sphere.
If this selection is possible then we can enumerate all points on (0,1) interval. Is there something in the proof that I am missing?
There are indeed transfinite sequences — more precisely, sequences indexed by ordinal numbers — that enumerate the entire interval $(0,1)$.
Such a sequence can be 'constructed' via transfinite recursion by the method of transfinitely iterating the operation of "pick an element that hasn't been chosen yet, or stop if there are none".
This applies to any set at all; this fact is basically the content of the well-ordering theorem.
(Note: I'm responding to your final paragraphs. Your description of B-T is somewhat incoherent as well, so I'm not entirely sure you understand what it's doing or that your final questions actually pertain to B-T)