The canister is full of bio media and a couple course sponges for the large particles. So if I understand correctly the live rock replaces bioballs etc in the canister as the bio-filtration (ammonia-nitrite-nitrate). If I get rid of the canister filter and buy another hydor powerhead then I'll be ahead in the long run?

Correct!

My tank isn't drilled can someone post pictures of how to set up an non drilled tank for a sump? DIY is not a problem for me.

You would need to buy an overflow box, which will overflow on you one day. Really think about drilling the tank :)

Can a tank be drilled while partially full ( say half full of water ) or will there be filings and bits falling into the water? I dont have a drill press can i use a hand drill?

Using an overflow box that hangs on is askin fir trouble I had one and it needs daily maintenance and your walking on needles on your sleep wondering if it's working right , not overly safe for power outages I don't have much faith in those vacuums. :)

No, it needs to be empty. If you have livestock already, it's too late, as there is always a risk of it cracking, and that would suck if you have stuff in it.

for the price of an overflow box you can buy a small tank thats drilled ive seen tanks for less than a hundred bucks and still a decent size

While sumps are nice to have and allow your display have a cleaner look, they are not mandatory to run a succesfull SW system. I've been sumpless since I set up my used system almost 4 years ago. I do have a future build in the works for a larger system with basement sump though. Other than the detraction of more visible equipment in and around the display of a sumpless set up, it can actually be simpler and ... gasp ... safer than something with a sump. BTW, I have a mini sump... it's a Rena XP series canister filter running empty except for a small amount of carbon.

Sorry for all the questions :) What would you recommend for test kits - brand and types? And do you think i need a skimmer?

Also since the single rouge anenome there hasnt been any sign of life in my tank... I'm sure the rock is busy cycling but no critters :) Any ideas? Its been 3 weeks time to turn on the lights?