Part of what keeps this stuff interesting is the varying opinions. Here’s my own take on it. You can see some pics of me dressed for formal occasions at www.planopiper.tk.

1) is the belt supposed to go through the belt loops, I ask because it does not seem like it would fit.
If your kilt is a traditional one, then those may or may not be beltloops in the back. Either way, they should be plenty big for any belt, so if you think they may be too small then I wonder if your kilt is a modern variation. Those sometimes have smaller beltloops meant for a regular belt. Since you’re asking about how to dress for a fairly formal event, traditional standards apply. The kilt belt should be worn with the top edge along the top edge of the kilt, so no tartan shows above the belt. In that case the belt can’t go through the loops because that would put it too low. On the other hand, with a formal jacket like you’re talking about, no belt should be worn. The kilt should fit well enough to stay up without a belt.

2) the sporran seems a little short right?
The sporran was originally worn to the side, which makes sense to anyone who thinks about it for a minute. It’s my understanding that it was moved to the front in Victorian times for modesty’s sake, to cover any bulge in the front of the kilt. With that in mind, position the sporran accordingly.

3) am I supposed to fold the hose back, if so how far?
Typically the hose are long enough to be folded over once or twice at the top. I like about a 3 inch fold. The top should be just above the swelling of the calf, or a few inches below the knee. If they’re too short to fold back and still keep the height, then don’t fold them. The fold will be less apparent than the height, so the height gets priority. In your picure they're a little too high. Some people think white hose are better for formal dress, some prefer colored hose. Off white is never formal.

4) How far is the kilt supposed to drop? My wife likes the current length but I thought it was supposed to be shorter.
For myself, I think the kilt looks better when it comes just above the knee. I used to think differently, and there are many other opinions about it. The top of the kilt should be very high, at least up to your navel. The position at the top is less important than the position at the bottom because it’s less obvious. In the picture of me on the front page my kilt has slipped down about an inch because I’ve been playing for a while and it’s settled. I should have tightened the straps a little bit.