Your description of your 27 year old’s top line loss seems consistent with his age as he goes through the muscle wasting process of a senior horse. It’s probably inevitable that he will take on a ribby look/feel. His digestive system is becoming less efficient at processing and metabolizing food. Some of the changes would also be consistent with Cushings, if that has not been ruled out. You are on the right track trying to give him unlimited free-choice hay both to help him keep weight on and staying warm at night. You might consider soaked beet pulp. Back to the question of the stall, I think 8×12 is adequate as long as he can lie down and get up. If he messes his stall, it may be hard for him to have a place to lie down away from manure & Urine. With the cold, and likelihood that he may lie down at times, good flooring, ventilation,and dust-free hay and bedding are important.