Sorry Jack, only just picked up on this one. I don't have a smart 'phone so notifications only get noticed when I look on my laptop - which is where I go to do this stuff.
First thing that occurs to me is the 1.2 only takes 2.8 litres of oil so if the OP tipped in 2 litres it's been pretty empty? If it's been grounded on a speed bump and the sump has been distorted the oil pickup pipe may be damaged too.
Digi Dreamer. lack of oil supply or reduced flow of oil, to the VVT pulley will affect power at higher engine speeds when it is used to advance the cam timing. Unlikely to have any great effect at lower revs on small throttle openings. You also ask about "timing" the VVT pulley, do you set it in the middle or at either end on the stops you asked? The pulley should be spring loaded to the retarded position so you don't, as such, "set" this. Just treat it as you would a solid pulley and forget about it's VVT function (unless the return springs are damaged in which case it will be very easy to advance and retard the pulley by hand - this is unlikely though. VVT pulleys tend to clack and rattle when badly worn). I remember getting quite "up tight" worrying about VVT pulleys when I first came across them because of the fact that they can advance and retard in relation to their inner hub and remember wondering, just as you say you are, where within their range of movement, they should be when the big securing bolt is tightened. Turns out they are all, as far as I know, spring loaded to the retarded position so you just treat them as if they are solid for purposes of fitting.
I like eeeno's suggestion to first clean out the VVT solenoid valve's screen filter ( the filters on my youngest boy's Astra VVT solenoids were absolutely filthy when we put new VVT pulleys on it a few years ago) but, of course that will have no effect on the oil warning light because the switch/sensor is screwed into the main gallery so should "see" pump pressure. Before considering renewing the oil pump you need to know for sure that oil pressure is low and not that you've just got a duff oil pressure switch. Unlike you, most people won't have pressure test equipment so a new pressure switch is the easy way to check this. Or you could just pull the oil pressure switch, put a finger over the hole, crank the engine and see if the pressure tries to blow your finger off the hole - not very scientific and a bit messy, but it'll tell you if the pump's not pumping (I'm thinking damaged oil pickup maybe?)
I agree completely with Koalar, get the sump changed and check on that pickup pipe. I suspect that may have something to do with the oil light staying on.
Regarding the timing kit you need. I believe the kit Koalar has shown above is what you need. Mine is a 2010 1.2 and I don't think there's really any substantial difference in this respect between your's and mine. The 16 valve is not the same and needs two locking tools for it's cams but otherwise I think all the 8 valves used the same kit. Her's mine:
View attachment 413825
It's a Neilsen branded kit which I bought because I've got some other stuff of theirs and I find it robust gear (probably made in China though? Mind you there's some good stuff made in China these days!) - not in the same class as my old Britool stuff, but very acceptable for serious DIY tasks.
Here's the application recommendations in close up:
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You'll notice it says it's suitable for the 16 valve and I notice many other versions of this kit (with differing brand names) make the same claim but I don't think it's right?
When you open the box you'll see this:
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If we take these components first:
View attachment 413828
The "dumbell" shaped black thing is for locking up the crankshaft - by the way it locks the crank with all 4 pistons at "half mast" that is to say half way up/down the cylinders. The earlier engines, much earlier than ours, were timed by marks on the pulley and oil pump casing which set Nos 1 and 4 at TDC.
The silver bar with the offset "slug" is for locking the cam on it's back end (ie opposite end of the head from the pulley end so you need to remove the cam cover to do this.) The slot on the cam which it fits into is slightly offset so fit this locking bar first as you are likely to need to turn the crankshaft to get it to line up. Having done that then see if the dumbell fits onto the crankshaft. The crank pulley has a wee "pip" (you can actually see it before you remove the aux belt pulley (phonic wheel) so make sure that pip goes into the wee hole on the dumbell. The hole on the end of the dumbell's arm lines up with the belt guard's securing screw hole and you use that guard screw through this hole to complete the locking up. If you have correctly fitted the cam locking tool and then find the crank locking tool doesn't line up than your timing is out!
The wee black "widget" with the big allen bolt and wee tooth on it's right side is for locking the camshaft pulley to stop it rotating when tightening it if you have had to slacken it's retaining screw (this lives under the sealing screw in the middle of the VVT pulley centre. So the screw you see in the centre of the VVT pulley is just a sealing plug (with O ring seal) which you remove (rag needed under it to catch oil spill) to gain access to the pulley retaining bolt which is actually inside the pulley. If you have to slacken this bolt - probably a big Torx - then the wee black widget is used to lock the pulley and you'll need to hold the cam - don't rely on the silver locking tool, you need to remove it - when you tighten down the pulley bolt (70nm if I remember?) If you leave the silver tool in place and the cam moves at all during tightening, you may shear off the lug on the back of the cam!
You'll no doubt have seen there's another big lump of metal:
View attachment 413829
This gets screwed to the rear face of the cam cover/cylinder head to keep them aligned as you tighten down the cam cover retaining bolts. I have to say I really couldn't see the point of this when I was doing my wee 1.2 Panda but realised what it's all about when I did my boy's Punto 1.4 8valve. It's all about setting up the cam sensor clearance. On my 1.2 the cam sensor reads off the cam sprocket (call it pulley if you like) somit's positioned on the "front" end, pulley end, of the cam cover. My boy's Punto has the cam sensor on the "back" end of the cam cover so the cover needs to be very precisely located fore and aft to achieve the correct gap between the end of the sensor and the slotted flange on the cam which it "reads" from. By the way, when you buy your new cam cover gasket - and it's a good idea to get a new one as they are known to leak with age - make sure you get a kit which includes the 4 wee O ring seals for the oil feed holes in the cover which feed the cam journals and VVT solenoid valve. Mine were as hard as old boots! Also, the gasket seals pretty well on it's straight runs but a wee bit of silicon sealant at all the corners works wonders.
You'll have noticed the wee two pronged tool too? It's the one on the left here:
View attachment 413830
It fits the spring loaded belt tensioning bearing assembly so you can easily rotate it to apply tension. Many people have attested to it's fragility and have found the wee pins shear off. Mine's been Ok so far, but if you do break it a pairof right angle circlip pliers (see on the right) do the job just as well.
On a personal note, and you can take this or leave it as you like, I'm of the opinion that "sleeping dogs" should be left to lie. So I don't like slackening and retightening that cam pulley retaining bolt. I prefer to fit up the timing tools before removing the old belt and if the camshaft and crankshaft tools both drop in perfectly then this proves that the timing, and particularly the position of the cam pulley on the camshaft, is correct. Having installed the silver cam locking tool, if the crank tool (dumbell) is more than just a "smidgeon" out then it may be that the belt is incorrectly fitted ( a tooth or two "out". these later engines are "interference" so any more than that and the valves and pistons get "intimate") However if the tools all line up then I mark belt, pulleys and casings with tippex. Slacken the old tensioning bearing and remove the old belt. I would pretty much always do a new tensioner and water pump so after I've fitted the pump I very carefully transfer the tippex marks from the old belt to the new one (usually recheck this at least twice just to be sure), remove the belt guard bolt on the dumbell tool so I can turn the crankshaft anticlockwise by about a tooth which lets you get the new belt on - you won't get it on with the locking tools both in place - and then fit the belt lining up the tippex marks very carefully and put some tension on the tensioner. Recheck the tippex marks and if everything is still aligned, fully tighten the tensioner until it's spring is springbound. If you've done everything right you'll find the dumbell tool end has now pulled back into line with the belt guard hole because the cam is still locked. Now remove the cam locking tool and rotate the crankshaft at least two complete revs to settle the belt and at the same time feeling for any signs of obstruction - like valves and pistons having a coming together. I like to do more than a couple of revs but be aware the cam cover is off at this time so oil may well leak from the hole where it feeds into the cam cover - Done that, very messy! If all seems well and the belt is running right - it tends to run more towards the back of the crank and cam pulleys - now you can set the tensioner bearing correctly (align the pointers on the bearing) and lock down the tensioner nut.
If you've done much of this sort of stuff, and it sounds like you have, you'll have no bother with this. There is one bolt on the engine mount to head bracket which is a bit of a sod for access but otherwise not a bad one to do.
There's an excellent guide by our Andy Monty in the grande Punto section which is well worth a read. all these engines are basically the same, just minor differences like coils and other ancillaries and where they are mounted.
By the way, I just realized there's a wee twin toothed "widget" in the kit I haven't mentioned. Just in case people are wondering, It's not part of the bought kit. It's a home made flywheel locking tool I made. Haven't actually used it yet but I made it about 2 years ago because my boy's Punto has a very small oil leak from the front of the crankshaft. It's never got any worse and it's not yet contaminating the belt, so I'm leaving it till it next needs a timing belt and I'll just do it at the same time. I shall remove the big pulley nut with "Hooligan" my big air gun but being able to positively lock the crank will make angle tightening it on reassembly much easier and I wouldn't trust the wee 6mm guard screw on the dumbell tool to resist the 20nm plus 90 degrees to achieve full tightness.
Hope that was helpful and please do keep us updated with how it all goes won't you?
