Recently installed (per local code) an air gap (AG) for my dishwasher (DW). Previously it drained properly through the garbage disposal (GD). I drilled the hole in the counter top, ran the drain line from the DW to the AG with the 5/8" line supplied from the DW manufacturer, purchased a length of 7/8" ID rubber hose to run from the AG to the GD. During the drain cycles of the DW, water does not completely discharge through the AG to the GD. It flows out of the AG on to the countertop. In order to provide a smooth transition from the AG to the GD, I needed to allow for a certain amount of additional length in the hose to keep it from kinking and this created a loop that drops below the level of discharge into the GD. Is this my problem?

Yes. If necessary consider attaching a 45 or 90 degree fitting to the air gap with a rubber coupling, then attach the 7/8 hose to coupling to prevent kinking. Shorten hose to eliminate the droop.

Thanks so much. I just raised the loop, extended the length across the back of the cabinet and secured it high on the cabinet wall. Fixed.
Follow up question:
This is a recently purchased flip home and sellers used some "shade tree" plumbers, I think (hence the air gap local code issue) The brand new dishwasher "stinks" (gray water gas). Short of pulling the DW out, any thoughts on the source/problem/solution?

Possible mold or mildew in pump. Run dishwasher a couple of times with a cup of bleach added.

Did you remove the knock out plug from garbage disposer (GD) inlet prior to connecting new dishwasher (DW) line ? Also, make sure inlet to GD ( where 7/8" hose connects ) is clean and clear of food and other possible obstruction. Any obstructions will cause back up. Finally, check for kinks in the 7/8" hose.

Back to you. Milo