2001 S60 code 1026

Is this a turbo or none turbo engine? Also where did you get the code from? Can not seem to locate the code? And to answer part of your question, there is no idle air control valve on this vehicle. You have an electronic throttle module. I would recommend you call Volvo to see if you have the extended 10 year/200k mile warranty on this component. You can also ask them if they are participating with the Volvo service for life program. If they at minimum you will get a free scan and free throttle test to see if it is failing?

So call them up and keep me posted please.

That is actually normal. Water is by-product of the combustion of gasoline. Here is a link on how the catalytic converter works.

https://www.2carpros.com/articles/how-a-catalytic-converter-works

And I can not seem to find that P code you have posted? But like I mentioned earlier and posted the earlier link, Volvo should at least do a free scan. And since this is a none turbo I believe just removing the throttle yourself and cleaning out the plate inside and out, remove the ETM fuse during this process. Once you put it back together I think you should be fine. I would recommend using the Volvo cleaner since it cleanes and lubricates the throttle plate. But the cleaner is expensive? You should be able to just use regular carb cleaner to clean it up as well. So try that and let me know how it goes. The fuse is in the engine compartment also. It will be fuse #7 10A
Good luck to you and let me know how that works out.