Once you get the engine running, the small bit of fuel will burn up with out causing any problems.

The VVT acts like the vacuum advance on a distributer, it changes with higher rpms and should not have any effect on idle. But do review your notes on how the pulley gets assembled. I remember seeing a good one on Volvospeed.com Any changes needed do not require timing belt removal, but will require the rear cam locks to be put in place, again.

I agree, the IAT sensor should not bother the engine at idle. But I do not know what the default values are.

That whistling sound could be a loose vacuum line???? Or cracked. Check the IC hose connections, make sure they will not turn if you grab a hose and try to twist it. Could the noise come from the broken IAT sensor?
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My back feels better when I sit in a Volvo seat