Maybe a 50/50 mix of water would work. Keep water prepared for water changes as they will need to be done often in a new QT tank.
You said your levels are fine, does that mean 0's across the board?
It's always safer to QT new fish incase of disease but since the sweetlips is already in the tank and seems to be doing well, I don't see any reason to move him.
When feeding the butterfly, give him minced bits of marine fish and/or crustacean. It has a tiny mouth used for picking between rocks and corals so the food needs to be small enough for it to eat. A frozen butterfly food is available as well if you can find it and would be another option.
Here is an example. And this is a great brand if you can find it.
Aquarium Fish Foods: San Francisco Bay Brand Angel & Butterfly Diet