In heating or in cooling mode?
In heating mode, ice will be a problem in the outdoor unit. In cooling mode, it'll be a problem in the indoor unit. Basically, where the refrigerant is being evaporated from a liquid to a gas and the cold temperatures are found, that's where the ice will form.
When I put it in heating mode at 26 degrees with fan speed set to AUTO, it takes a few minutes to start up. A defrost light turns on and until that light doesnt turn off the heating does start. Also, at 26 degrees in the beginning it doesnt feel like very warm air, but after a while it warms up is this normal?
Yes, that's normal. "Defrost" means it's going through a cycle where it warms the evaporator coil in the outdoor unit to melt any ice on it, then it'll go into cooling mode. It may return to defrost periodically if it detects icing. Depending on conditions, it may also use defrost in cooling mode, but then it's defrosting the indoor unit.
I've seen outdoor units on "not very well designed" systems that have completely disappeared in a block of hoar frost !
It may seem counter-intuitive, but icing is actually a bigger problem with drier air
With very wet air, a lot of water will condense and that gives up a lot of latent heat - which keeps the coil temperature up. With drier air, there's less moisture condensing out, so less latent heat given up, so (other factors being equal) the coil will reach a lower temperature. So wet conditions tend to create lots of condensation which runs off the coil, dry air tends to form hoar frost which will eventually block the coil and stop the system working - which is why any well designed system will have a defrost mode (which may be as simple as "stop the compressor, let the coil reach ambient and the ice melt off").
EDIT: Oh yes, a delay on start up is normal. The system has to get to a state where liquid is getting to the cooling end, and the pressures in the system are such that it will evaporate when it hits the valve or capilliary. This can take a while, depending on what state the system was in before it started up, size of the pipework, and a few other factors (commercial systems often have "shut-off" valves to keep the refrigerant as liquid in the condenser when the system is shut down).
I notice when starting up the plastic makes creaking sound every so often and then stops once temperature is set, is that because the material is expanding/contracting?
Yes.
They might have let the refrigerant push the air out though, in which case you won't have any problems but one day they might.
I'd like to know how they managed to avoid the gas mixing with the air, and how they judged just the right amount of gas so that all the air was pushed out without pushing any gas out to atmosphere (which is illegal). So they are either admitting that they left air in, or they are admitting that they broke the law by venting gas