From a veteran to a beginner, here are my thoughts:
1) Whatever seems realistic. If it's a large, flat plain, you could probably see for a good distance. If it's a dense jungle or foggy, you may only see them when they're five feet in front of you. Also, you should always look at two things to determine what would be feasible for this creature: vision modifiers (low-light, dark, tremorsense, etc etc) and their Perception score. As the DMG states, unless someone is actively looking for people (like a sentry guard dedicated to watching to horizon) characters and NPCs should always be considered taking 10 on any Perception checks needed to be made. So if a passive 15 Perception check (Taking 10 + 5 ranks) is enough to see the PCs marching onward across the grassy field, then they see them. Simple as that.
2) What are the monster's motivations? Is there a reason the kobolds are guarding the treasure? How dedicated to that end are they? What's the group composition of the guards? The neat thing about 4.0 comapred to pervious versions is that most battle really feel like Party vs. Party encounters. Monsters now have roles in an encounter and specialize in what they do best (lurker, soldier, controller, etc etc, kind of like a group of PCs do with their class slection (defender, striker, leader and controller). To that end, the dynamics of a group of kobolds could be as varied as a few grunts grizzled on the front lines, a priest to lead them spiritually, a captain of the guard to lead them tactically, a mage that revels in dark magics and is misunderstood by his companions and a tracker/guide who's spent years tunnel running the depths of dwarven caverns as a sabateur.
You also need to consider how they're guarding the treasure. Do they have traps set-up (sneaky kobolds!) to eliminate their size difference? How are they taking guard shifts? Does the tracker/guide kobold run scouting routes outside their base of operations? Have they set-up early warning systems so they can be prepared for an attack when it comes? These are things to consider when not only fleshing out the intrigue of the story but the encounter itself. A small group of kobolds might be a larger threat if they have a bunch of traps built to assist them, bumping up the effective CR of the fight!
3) Think of this as a storybook or a movie, rather than a game. Once you realise you aren't limited to just kicking down doors, the possibilities are endless! I would also encourage using skill check encounters to mix things up a little. Maybe the PCs cause an avalanche and they need to start making some endurence checks to run away from it. Give bonuses for creativity. The Wizard has flight so he just flies away, but can only choose one other PC to save, the Fighter has Athletics so he maybe gets either a small bonus to his endurance checks OR can make a reduced DC athletics check to succeed instead of an endurence check, but only the one time! (athletics is too varied and distanced from long distance running to truly help more than just a little bit). Penny Arcade did some cool things with a free-fall combat encounter of a 3D grid or an MMO style cavern city where PCs had to go out and collect 15 spider legs or some such silliness. If you're ona budget and can't afford unique things like minitures and terrain, sometimes having varied locations that you can imagine are fun. Ever consider going to the Feywild? Prismatically coloured trees that hum in harmony to the wind striking them, animals with fur that wisps about even if there's no wind at the time, three suns that are coloured red, blue and yellow cycle in the sky; really, your options are only limited to your own imagination!
Overall, it sounds like you guys are having fun, and if it's just the two of you, maybe taking suggests on what your other players wants to do is a good idea. If he says he wants to see something out of a horror film, give him a crypt haunted by wights, phantoms and aliens from an extradimenional plane. If he wants to explore a jungle, go to a towering ruin made of solid gold with treasure beyond your wildest imaginations if you can survive the traps ahead. Maybe he wants to go fight a war and become a veteran. Just give him a small scale war to the west where civil unrest has brought upon some freedom fighters to rise up against a tyranical government, however, the head of state is now changing and one of the candidates is truly a compassionate person towards the plight of the people, even if the rebels don't believe him! Again, it's your imagination, run with it and fun will follow =)