1) Are the embassies far away from the city? Nope, all the larger countries are just over the bridge in Yarralumla/Barton area maybe 5 minute drive
2) Which hotels would you recommend? Budget $150 a night. hmm got me there most of the good ones are more than that http://www.wotif.com/search/Advanced?selec...urrencyCode=AUD
3) Places to go after 7 for dinner ( i'll probably be arriving at that time cos of the drive from Melbourne ) - Depends on what you like I personally always go to Ginseng in Manuka it is the best Chinese in Aus well I haven’t been to flower drum but it's meant to be almost as good as that.
4) Places to go to in the day besides the Parliament House - War Memorial, National Museum etc check out http://www.visitcanberra.com.au/