Definitely go with drilling if you can. So much safer than an overflow box. There are some good bits online that explain exactly how to do it but I will put a few random thoughts and tips below.
When drilling the main thing to remember is to just take your time.
When I have drilled tanks I just used a cheapo bit off ebay. You need a decent variable speed drill (so you can drill slowly, and obviously not a hammer drill
Ideally you want a cordless drill as you are going to be using water near it as well.
Best thing to do is get thickish bit of polystyrene and use your hole saw to cut a hole through it. Now tape the polystyrene to the tank so the hole is in position for where you want the hole in the tank to be. You can now use the polystyrene as a guide and this stops the drill bit from slipping all over the place.
As you are drilling remember to take it slow, you are not drilling so much as grinding away the glass. As you are drilling keep the area flushed with water to stop the glass and drill bit getting hot and to flush away debris. Once you have a good groove in the glass you can remove the polystyrene which makes it easier to see what you are doing.
One other important tip is put a blanket or something to catch the glass bit as you you drill the hole out. The last thing you want is to drill a hole only for the bit of glass to fall through and smash the other side of the tank.
Regarding the hole size, return pump size etc. There is a very good calculator on a well know reefing site (which I'm not allowed to link too) which will calculate the flow rate through certain hole sizes.
To work out what you need:
1) Work out how much flow you want through your sump. This depends on what you want to do with your sump and like most things people tend to disagree on what flow you need through a sump.
If you want it as a fuge/DSB type of deal then you need a fairly low flow rate through it.
If you want it just for equipment then it s best to try and match it to your skimmer capacity (i.e. if you skimmer has an output of 800LPH you want 800LPH of water going through your sump so that the skimmer constantly has something to do and the water going back to the main tank should in theory be fully skimmed.
2) Once you know what flow rate you need go to the link I PM'ed you and enter it in (remember its using US gallons). This will tell you what size hole/pipe you need and what size weir/overflow you need as a min.
3) What ever hole size it gives you I would round it up to the nearest half inch. Bigger holes are better in this case. Also I would ALWAYS put a back up in (ie drill a second hole the same size) so that if one hole happens to get blocked the second will still be able to handle the flow. I personally drill the second hole slightly higher than the first. This way if I notice the water level has gone up as high as the second hole I know instantly that there is a problem with the first one.
4) Plumbing. You need to decide what kind of plumbing you want. Personally I would drill the back of the tank and go for a durso based design.
5) Return pump. First thing to do is to measure the distance between where the return pump will sit and where the water will return back into the tank. This is your "head height". As a pump pushes water upwards it loses power and this is called "head lose". Most pumps will have a graph on the side showing the flow rate at different head heights. You need to check this and find one that will give you the flow rate you desire (as worked out in 1) at the head height you have on your tank. More is ok as we can always adjust the flow rates to slow it down.
6) Return plumbing. Personally I would go for hard plumbing, it can sometimes be a bit more louder then soft plumbing but it is easier to hold in place and direct the flow from the return (which is important in a seahorse tank). Another good thing to do is put a "T" on the return line. Have one part go to the return on your display tank and another t off and return directly back into your sump. On the return to the sump add a ball valve to control the water flow. This will let you adjust the flow rate from the return pump without causing any back pressure on it. If you put the valve directly on the return line it causes back pressure on the pump which can damage it. This way there is no back pressure and the water just returns into the sump (you can use this return for feeding a skimmer or a HOB fuge for example).
Hope that helps a bit. Not very clearly written I know but hopefully you can pick the useful bits out of it
Edit: One thing I forgot to mention. On your return pipe from the sump. If you have the end of the return pipe under water in the display tank you want to put a hole in the pipe just below the waterline. This is because if the power to the pump goes off this return line with turn into a syphon and start draining the display tank into the sump. The hole in the pipe just below the water level will mean that as soon as the water level drops to this point the syphon will suck in air and break.
you also need to make sure that when you fill your sump up that you have enough room left in it for the display tank to drain until the hole is hit and syphon is broken (ie dont completely fill your sump or when the pump goes off the water that drains into the sump from the return line will flood it). Once you have everything set up play with it for a while by turning the pump on and off and making sure it always works ok. Once you have found the right water level for the sump make sure you mark it on the side of the tank so you always know never to fill past this level.
That's my biggest problem with them.
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