This is the bit about this situation I find hard to understand. Are they STILL arming IS?
It is not as simple as that as we look at the issue through a western perspective. Saudi, Qatar, Kuwait, Iran et al look at these issues far far differently to us as this is all part of a much bigger game to them and that is the balance of power in the region. I've attached an article below which discusses this. Clearly this is one in hundreds discussing the topic but gives a rough overview (true reflection is open to debate of course!).
However, is it State policy in Saudi, Qatar et al to fund and arm IS or Al-Nusra... no... do they turn a blind eye to funds being channeled... probably yes in some cases. Whilst through our eyes, IS are a fundamental threat to peace and security, to some people in the Middle East they are a necessary evil in the wider war taking place. We don't understand that in the West as we don't live there and in our view (rightly in my opinion) we think the long term consequences of such policies are counter-productive and to the point insane.
Our own policies haven't also helped the situation e.g. removal of Iraqi Army influence in post-Saddam era, failure to provide support to either side in Syrian conflict etc etc. However, whilst people suggest we should stay out of such matters fail to understand how inter-linked our society is to such trouble spots through the threat posed by fundamentalists back at home, the need for natural resources through to the globalised economy. I guess the point is there are no real long term solutions to these problems for anyone; it is a continuation of the ever changing world dynamic where economic prosperity of your nation is fundamentally the most important need and I don't see that ever changing in the future (clearly a pessimistic view!).