"I don't know of anyone at the (Central Intelligence) Agency who was fully comfortable with the Libyans telling us everything we wanted to know," said a former senior intelligence official. "The going assumption was they were lying whenever possible, and we were rarely proven wrong."Moreover, he said, U.S. intelligence believed that the Libyans had not been completely truthful on the quantity as well as the quality of the weapons. "We believed they were saving something for a rainy day."
More details at link.
So Gaddafi was set free to make money and corrupt the Western political and intellectual class in exchange for what exactly?
Chemical weapons are still an issue and he still managed to extort concessions from the West using his HEU stockpile in 2009.