Without a picture of your setup - I'm just guessing.. but...
You most likely have a combination Filter / Regulator. The filter is a water separator...
There should be a knob on the Filter/Regularor that allows you to adjust the Line Pressure.. See if you have one and try turning it one way or the other.
If you have no leaks in your hose - 90psi on the output side of your regulator means that the entire hose is pressurized to 90psi. - hose length doesn't matter in a sealed system. If yours reads 40psi - try adjusting it up to 90psi.
Hook something on the end of the hose - that allows the compressed air to flow from the system - and then yes, you will see a pressure drop at the end. How much of a pressure drop - depends on how much air is allowed to flow out.
Another possibility is that you need to drain the water from your separator - it could be clogging up..
FWIW,
Carl B.