Question 1: Europeans nations called Ottomans this because Ottoman Empire were technologically inadept, socially backwards, economically poor and militarily weak. Was the situation of Ottoman Empire better than ANY other European nation in terms of technology, economy and socially?

The chief rivals of the Ottoman Empire in 19th Century Europe, Romanov Russia and Hapsburg Austria-Hungary, all engaged in programs of modernization along similar lines and with similar results. The trio of powers oversaw vast, multi ethnic domains where different languages and religious practices were observed. Nationalistic sentiments led to rebellions, uprisings and resistance to reform throughout southeastern Europe, and not a unique feature of Ottoman domains. These nationalistic uprisings culminated in the assassination of Franz Ferdinand of Austria Hungary and sparked WWI.

None of the three powers survived that final test of 'the Long 19th Century.' Neither Romanov Russia, Hapsburg Austria-Hungary nor the Ottoman Empire itself survived intact. All were fundamentally transformed. Russia entered a prolonged civil war. Austria-Hungary dissolved into smaller successor states. The Ottoman Empire was partitioned into smaller states and imperial mandates overseen by the victorious parties. Anatolia was to be partitioned too, but Turkish nationalists prevented that and the successor state of Turkey was formed.

The Ottoman Empire was not backwards when compared to Czarist Russia and the Austro-Hungarian Empire. An argument can be made for Britain, France and Germany faring a little better than the Southeastern European trio during this time period.

Question 2: Persians were usually the rivals of Ottomans. Was Persia any better than Ottoman Empire during this time? Was it more advanced or less advanced?

The Qajar dynasty ruling Persia had ceased to be a great rival to the Ottoman Empire. Persia itself had become part of the 'Great Game' between the British in East India and the Russian Empire. The British enforced trading concessions for goods such as tobacco, and later oil. Wars with Russia also took their toll, and cost them lands in the Caucasus. The rulers if Qajar Iran were unpopular at home to boot. To protect his rule from restive subjects, the Naser al-Din Shah Qajar formed a Cossack brigade, Russian trained and led. After his assassination in 1896, they became the Praetorian Guard styled king makers in Iran. As the only organized and well funded force in the country, their backing mattered to whomever ruled Iran.

I would say that, far from being a competent rival, Persia was in worse shape that the Ottoman Empire throughout the 19th century, especially past the quarter century mark.

Question 3: Does this statement mean European nations counted Ottoman Empire as a European nation?

I'd say this one pretty well answers itself. Though their European holdings shrank throughout the 19th century, even today Turkey is an associate member in the EU and has pushed for full membership at times, which was seriously considered.

Question 4: Why did Ottomans gave out so many capitulations? It seems they gave it to anyone who was more powerful than them, to the point where merchants of UK paid less in Ottoman ports than they did in UK ports.(or at least that's what my Grade 10 history teacher told me back then)

Modernization is expensive. And banking institutions are more dangerous than standing armies. But standing armies to ward off rivals are pretty dangerous and expensive.

The Ottomans fought the French in Egypt and Syria at the dawn of the 19th century. They fought the Serbians, the Russians, the Greeks, the Russians again, Egyptian rebels under Muhammad Ali Pasha and his son Ismail. That's just the beginning of a long, long list of wars between 1800 and 1900 that the Ottomans were forced or chose to fight.

A significant debt was accumulated to foreign financiers, and an inability to pay resulted in the creation of the Ottoman Public Debt administration in 1881. This body of international lenders and administrators became a powerful internal force in the Ottoman Empire and enforced concessions, levied taxes. In exchange it was to finance projects such as rail roads and modernize port facilities. In practice though, it interfered with economic directives in ways that didn't favor the Ottoman Empire. The Ottoman government lost control over vast swaths of the economy. Colonization through lending.

Question 5: Was there any hope of Ottoman Empire regaining it's former glory post-1800s or was it hopeless?

Men cannot command success, but they can deserve it. The Ottoman Empire did what it could to deserve success in this period, and that success eluded it was not a preordained conclusion. Many external and internal factors precipitated the decline of the Ottoman Empire.

The "Sick Man of Europe," if such a moniker must be applied to any country, was Austria-Hungary. The supposed ethnic strife that plagued the Ottoman Empire (in addition to being complete nonsense; the Arab military units were for the most part loyal and most of the more dangerous nationalists had already achieved independence) was much more obvious and immediate in Austria-Hungary. The Ottoman military required very little in the way of foreign reinforcement to meet its operational goals -- contrast that with Austria-Hungary, which required ever-increasing support from Germany as the war progressed. I could go on but you get the idea.

If nothing else, look at what it cost the Entente to actually knock the Ottomans out of the war. Despite some truly remarkable mistakes on the part of the Ottomans (the assault on Sinai was poorly conducted and then there's Enver Pasha, the guy who marched an army to a cold, bitter death in the Caucasus mountains in an ill-advised winter campaign and followed that up by blaming the Armenians), the Entente was never able to secure the kind of breakthrough victory they would've needed to win the war anywhere near as quickly as they should have, if all the rhetoric about the Ottoman Empire being a decadent and broken country were true. Consider also that the Entente was utterly humiliated in Turkey after the war.

That's not to say the Ottoman Empire didn't have problems. It most certainly did. It had rebellious subjects in the Hejaz (resulting in the famous rebellion now associated with Lawrence of Arabia), the Ottoman high command was utterly unprepared for Gallipoli (possibly because the campaign was utterly insane) and mostly kept the Entente penned in by simply throwing more and more fresh units at them, and the Ottomans, as had become tradition at this point, tended to fold like a house of cards as soon as a Russian army sneezed in their general direction.

But despite all this, the Entente seemed to overlook the fact that the Ottomans had embarked on a dramatic military reform after the complete debacle that was the last Balkan war. By 1914 the Turkish regiments were at least on par with their German reserve counterparts (thanks in part to the German military mission that provided much-needed updates to Ottoman doctrine), the worst of their nationalist uprisings were behind them, and the Ottomans were also rather familiar with Entente military doctrine because the French and British also had military missions in the country in 1914 (Royal Navy, French Gendarmes).

I suppose it boils down to this: if the Ottoman Empire truly were the Sick Man of Europe, it wouldn't have taken the Entente a million casualties, four years, and a staggering amount of war materiel to finally break the Ottomans.