Actually, the front sight is the little golf tee shaped thing that screws into the front sight base/tower/gas block.
Now then, if you have an upper with a rail on top, the front sight base needs to have an "F" stamped into it or you'll never have enough travel to get the completed rifle sighted in.
Since you seem to be doing a build, I'd suggest in the strongest possible way that you go find a copy of Patrick Sweeny's book on how to build one. He's done about 5 books on various aspects of the AR system.
And yes, you put the sight base in a jig and use a drill press or milling machine to drill the holes, then a taper reamer to make the pins fit. You can use straight spring (roll) pins, but the heat/cool cycles might blow the heat treat and you'd lose the clamping effect.
Alternatively, you can drill it, tap it and use set screws, but I've seen several of those lashups blow off.
