since replacing the dead air flow sensor thus reviving the idle I've noticed a pronounced rattle. it's only there when it's idling. low revs or when powering over 3500 rpm. took the top cover off and placed a careful ear beside the block. it seems to be coming from a thing sticking out of the forward valve cam. the book. at besy guess, says it's the variable valve timing control valve. could this be sticking? and could it explain a slight loss of torque? i'm off to investigate but any help would be appreciated.

found the trouble. it's this thing in the pic. it stops rattling when I disconnect it, and rattles when it's on. not too sure what it does so any suggestions?
correction, the warning light is now on. again.

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Did you get this rattling sorted mate? what was it in the end? Looked at one today (2000W 1.8 122BHP) and had the same thing going on with sounding like a diesel at idle etc. Only now and then though, and rattle went when you rev it. Cheers.

thats the variable valve solinoid, try stripping and cleaning it (blow it out with compressed air). If still no better then probably you require the variable valve hub that is on the cam shaft.

The Exhaust solenoid which is the part you are talking about was known to have problems in the early years of the S40. Replace it and it will be fine. They updated the part due to the rattle problem. It's very easy to change.

To answer your other question, yes you will lose power and torque because the valve is not advancing the timing.