How did Sweden manage to support the Nazis with iron ore for their war machine, which kept Sweden "Neutral" and still retain good relations with the Allies post WW2? Does doing trade with an enemy in war not constitute collaboration?
By the tone of your question, you're seeing WWII as a crusade against evil where there can be no neutrals, and in hindsight I agree. The laws of war didn't use these categories at the time. Being neutral can mean trading with both sizes equally, or with neiter one. If one of the belligerents is closer and trades more, that happens.
- The US transported lend-lease supplies to Vladivostok because Japan and the Soviet Union were neutral towards each other. It was not in the Allied interest to question that legal concept of neutrality at the time.
- It was to the advantage of the Allies to have Spain neutral. By denying Sweden the right to remain neutral, they might have pushed Franco into taking Gibraltar. As it was, he sat the war out.
- Forcing Sweden into abandoning neutrality might have pushed them into the war against the Soviets, which was a rather popular notion worldwide until the Uncle Joe propaganda.
"Sweden emerged physically unscathed from World War II." That was the whole point of its neutrality. Other Scandinavian countries suffered more because they were "involved." In Sweden's case, there was no fighting, no occupation, nothing related to war, hence "unscathed."
How did Sweden emerge morally unscathed? First, even Germany and Japan were forgiven and rehabilitated after the war. Although Sweden "tilted" toward the Axis, her culpability was far less than the other two. She didn't commit any atrocities (although her iron ore and other exports were used in their commission).
Sweden even did a favor or two for the Allies; a Swedish-American spy,Eric Erickson operated from Sweden while spying on the German oil industry.