Dear Stacey,
your MD section is correct, and yes if the scaling factor is 1 then indeed
a NVE simulation is conducted. The dissipation you observe is most likely
due to the fact that kinetic energy is converted into potential energy, which
is expected when you start from a non-equilibrated and/or energetically low
initial configuration. Let me also comment that the scaling is conducted on
the atomic velocities and not on the temperature and that 0.99 is generally
a rather low leading to a rapid quench, not annealing.
Best,
Thomas