^^MIDNIT3 - there is an easy way to check the correct valve operation.  I saw it recently in the BGB.  I will see if I can find it again.  

Carmikey - thanks mate, appreciate it.
Also, I've pm'd you.

When I next see our car I will see where this hose goes and let you know.

Cheers

This should be what carmikey was referring to:

Awesome, thanks guys. Really appreciate it.
I'll test the operation of it tomorrow.
Arty, get a chance to look at yours?

It tees into to a pipe which connects from the outlet of the AFM to the ISCV (via several sections of rubber and steel pipe).  See pics:
 

Thanks Cogs. (I'm thinking about just getting a nipple welded onto the BOV joiner pipe.)  
 
Ok.  So I tested the AC idle up VSV using the above method from the BGB, and it works fine.  I also had a spare Gen 2 VSV that I tested as well and it worked fine as well.  So the VSV is not faulty.
 
Then I tested the sensor plug using a circuit tester, and there is power there when the AC is off, but no power when the AC is on. Yep, it working in reverse!  
After looking at a few wiring diagrams, it gets the signal from the AC Amplifier and then I remembered when I got the AC fixed many years ago, they said there was something faulty with the Amplifier which they 'fixed'. Yay.  I have a suspicion they either wired in up incorrectly or put in a generic amplifier.  
 
So...where to from here? And to think I just wanted to re-route a vacuum hose!
 
For now, I'll leave the VSV sensor unplugged which mean no air being let in or out, and work myself up into figuring out where the AC amp is located and how I'm going to fix it.  

Is your car an early model sw20 with a gen 3 conversion? If it is there is a work around you need to do to get the ac idle working the right way round.
I experienced this myself with my old 1990 running a later model power fc.
I installed a relay next to the ecu to switch the ac signal going into the stock ecu.

What people experience when they have this issue is that the car seems to idle low or struggles a bit with the ac on. With the ac off the car idles higher than normal.
Is that what's happening to you?

Hey Nick, my car was a 1990 NA ADM model before I put the Gen 3 in.
Yep, that's exactly right... Idles high without AC then struggles with AC on. I fixed this (kinda) by increasing the idle slightly, way back when I first did the conversion (had a lot less knowledge about the car back then, just thought the load of the AC compressor made the engine idle lower).
Very interested in how you fixed it!