How do I fix this? Not sure what is going on with the inside hinge rods poking through the carpet. How did the factory do it? Are they supposed to poke through the carpet?

 

Yep, that's the way they are,but it looks as though the carpet was cut short in the pic.
Looks like it's been replaced.

 

Those pins go in the seat backs, it's what they hinge on.

 

 

I understand that the rods go into the seat backs to but what keeps the carpet up against the seats so that the rods are not visible? In my case, someone obviously put the holes into the carpet too far towards the center of the hump but even if they were in the right place, what would keep the carpet pressed up against the seat? is there some kind of grommet or something that is supposed to be used?

 

Nothing goes there, they just cut it too short,

 

Once you install the seat backs onto the pins the pins should no longer be visible. You have to hold the seat back at an angle (opposite side facing the front of the car) to install the lower pins into the seat. As the seat enters onto the pin you'll be able to straighten the angle, then install the lower threaded pin on the opposite side. The seats are so snug that they should hide the pin. If that is not the case I'd pull out the seat back and seat bottom, mask and paint the pins with satin black (to match your black carpeting). Then when you install the seat back it should look fine.

Lon