Is it enough that two men see a couple hugging and fondling and copulating or do they have to see the actual penetration?
Witnessing hugging or fondling is not enough for hudud (ordained punishments) for zina. This is because the zina that entails hudud is defined by penetration. Though, these haraam actions (fondling) could entail disciplinary punishments but that is depended on the level haraam actions and it can be given only by a judge.
As for zina that entails hudud,
Shaykh Ibn ‘Uthaymeen (may Allaah have mercy on him) said in al-Sharh al-Mumti’ (6/157):
They should describe zina in clear terms, such as saying: “I saw his penis in her vagina”. There is no alternative to that. If they say: “We saw him on top of her and they were naked”, that is not acceptable. Even if they say “We saw him doing with her what a man does with his wife,” that is not sufficient as testimony. They must say “We bear witness that his penis was in her vagina.” And this is very difficult, as the man said who was testified against at the time of ‘Umar: “If you were among the (four) thighs you would never be able to give this testimony.” Hence Shaykh al-Islam Ibn Taymiyah mentioned that at his time no case of zina was proven by means of testimony from the time of the Prophet (peace and blessings of Allaah be upon him) until the time of Ibn Taymiyah. If no case was proven from that time until the other, then we do not know of any case that was proven by testimony up till our own times, because it is very difficult.
And moreover, for zina, it is four (not two) sound witnesses of upright character (i.e. should not be known as a faasiq (sinful) person).
Shaykh ‘Abd al-Rahmaan al-Sa’di said in his Tafseer (1/563):
“Why did they not produce four witnesses?” [al-Noor 24:13], i.e., why did the accusers not bring witnesses to the things they accused them of? “four witnesses” i.e., of good character. “Since they (the slanderers) have not produced witnesses! Then with Allaah they are the liars” – even if they are certain about that in themselves, they are liars in Allaah’s judgement, because Allaah has forbidden them to speak of that without four witnesses. Hence Allaah says: “Then with Allaah they are the liars”, and He did not say “Then they are the liars”. All of this points to the grave sanctity of the Muslim’s honour, so it is not permissible to make accusations against it without establishing testimony.
Moreover, you should be careful if you are giving false witness because that will be a slander. And if it is really a slander, the hadd punishment will be upon the witness.