1. He spent much money on clothes.

2. He spent too much money in buying books.
3. He spends lots of money traveling to many countries.
4. He spends plenty of time watching TV.
5. He spent a lot of time in buying items in the department store.

Are all grammatical? Do we have to use 'in' before the ing form? Do we have to drop 'in' before the ing form?

#1 would be better if you used "a lot" or "a great amount" instead of "much."

The rest are fine except for the use of "in" -- you don't need it in front of the -ing form.

1. The sentence "He spent much money on clothes" is grammatically correct. Here, the preposition "on" is used to indicate the recipient or purpose of the spending.

2. The sentence "He spent too much money in buying books" is also grammatically correct. In this case, "in" is used before the gerund ("buying") to show the action associated with spending the money.

3. The sentence "He spends lots of money traveling to many countries" is grammatically correct. Here, there is no need to use the preposition "in" before the gerund "traveling." The sentence conveys the idea of spending money on the activity of traveling without requiring the preposition.

4. The sentence "He spends plenty of time watching TV" is also grammatically correct. Like the previous example, no preposition is needed before the gerund "watching." The sentence indicates the action of spending time by watching TV.

5. The sentence "He spent a lot of time in buying items in the department store" is grammatically correct, but it can be improved. Instead of using both "in" before the gerund "buying" and "in" before the location "the department store," it would sound better to say "He spent a lot of time buying items at the department store." This way, the preposition "in" is not used before the gerund, simplifying the sentence without changing its meaning.