I understand that they didn't find and WMD's in Iraq, but why would the UN and other nations put sanctions on Iraq if they didn't have any?
The WMD resolution was passed in 1991. Hussein definitely had WMDs (not nuclear, though) at the time (the US sold quite a bit to him), and UN inspectors supervised the disarmament process. Of course, he had the weapons all through the '80s and used them against Iran as well as the Kurds. Hard to say why it suddenly became an issue.
Even harder to say why Bush Sr. pushed through another $1 billion loan for Iraq just a few months before the Gulf War despite being fully informed that Hussein was using the cash to fund the invasion of Kuwait.
By the time the US invaded a second time (justified by decades old intelligence and flimsy 3rd person accounts), everything Hussein had left was useless, which the UN inspectors already knew. The problem was that Hussein wasn't completely cooperative. Of course, if the UN announced that Hussein had no WMDs, Iran would have invaded Iraq the next day and a civil war would have erupted from the 3 cultures forced under one nation by Britain, France, the US, and the USSR. And the world wouldn't exactly come to the country's rescue. So Hussein bluffs to save his own skin, not take over the Middle East.
Perhaps the hardest thing to figure out, though, is how the deaths of anywhere between 500,000 and 1 million children at the hands of the economic sanctions can be justified as a method for teaching Hussein a lesson. If he's evil, what are the nation's that promoted and supported genocide?