OK, illuminated Bob, here you go:
Questions:
1. What is the proper gauge wire to use for connecting up driving lights?
12 gauge from the relay to the lights (separate one to each light - double up at the relay terminal)
10 gauge from the battery to the fuse and fuse to relay input
14-16 gauge from relay coil ground to chassis ground
14-16 gauge from dash switch to +12V and another 14-16 gauge from dash switch to relay coil
Some people may think these gauges are overkill. My response is "Those lengths of wire are cheap and won't get hot and melt their insulation. Get over it."
2. Is the same gauge wire used throughout the driving light wiring system?
See above for #1
3. What kind of connections are best? Mine have spade connections coming off the lights now.
That's ok, and use a pair of 8" "channel lock" or water pump pliers to crimp the connection. The best connection is done with a ratcheting, adjustable crimping tool, but at $50 bucks for a good one, for you I would recommend the channel locks.
4. I have the right bosch relay, need to get a fuse holder, 20 amp I believe is correct.
Amperage is fully dependent on the current draw of the light bulbs. 20 amp is a good start, but you may end up with a 30 amp - I'm jus' sayin'....
5. An unused switch already exist at the dash, so no problem there.
Que Bueno!
6. There is an unused pigtail with spade connector coming off the positive battery cable. Should I be using that?
OK, as long as it goes into a fuse physically close to the battery.
7. I am using a wiring diagram scavenged off this site.
What you've described is pretty simple and straight-forward. It should work just fine.