Did he follow ATC instruction to descend too literally?
He did take it literally as it was intended. It was an instruction to descend. Had there been the words 'when ready, or 'at your discretion, descend', IMO it is unlikely the accident would have happened.
Ultimately though it should have been Willow who said, 'pan pan, pan pan, pan pan, PGW, PGW, PGW, engine failure, tracking present position direct bankstown, driftdown procedures 2 POB.
GG