1. I think by the prereq of having an ortho rotation is that they want you to do an ortho 4th year rotation at your home program (meaning they don't want you there on July because they are busy with their own students). My home program does this, they do not taken outside rotators in July.
2. Basically by doing an ortho rotation during the first month of 4th year, you should be able to meet enough people and formally ask for your letters. That's what everyone did at my home program..we have a 2 week ortho elective during 3rd year, but no one asks for letters at that time. That is something to do formally during your 4th year. You can definately shadow in clinics and try to scrub some cases when you have down time, but I think you should delay asking for a letter until later.
3. The VSAS system is how you apply for aways. Typically most students do 2 or 3 away rotations. It's kind of a tricky subject on how to apply and all that jazz, but basically its a first come, first serve system (usually). The easiest thing to do is talk to 4 years in your class to get recommendations on where they rotated and what their experiences were like. I think the application opens up March, so actually now is the time to get that set up in terms of looking at programs and trying to decided on 3 or 4 you would like to go.