Given that the King James Bible was commissioned during the 1604 Hampton Court Conference, and James I did not meet George Villiers until 1614 - Villiers was only 11 years old when the translation began - the last part is decidedly false.
I would add that it's a little dangerous to project modern notions of sexual orientation onto the 17th century. Monarchs at this time surrounded themselves with retinue of courtiers, and typically chose "favourites" who drew a disproportionate share of their attention. Since the person of the King was effectively an embodiment of the state, courtiers jockeyed for his attention in the same way that lobbyists vie for the attention of Congressmen today. And in a similar fashion, various factions pushed certain favourites to the centre of the King's attention to ensure that their interests would get a hearing at court.
This was certainly the case with George Villiers. James had arrived in London with a retinue of favourites he had brought from Scotland, but they were soon joined by other favoured figures in court - such as Viscount Haddington, Lord Hay and the Earl of Montgomery, and especially Robert Carr, who was made Earl of Somerset - all of them benefiting enormously from the King's largesse. Villiers was a handsome 21-year-old when he first met James - and Somerset's fortunes were on the wane - and he took advantage of the King's favour to amass titles and wealth, while also bestowing patronage upon other courtiers in his faction.
Many of the contemporary comments about the King's relationship with Villiers/Buckingham indicated that their affair bordered on the homoerotic - but this might also be a reflection of the resentment of courtiers who were outside the King's charmed circle. It was very common for courtiers who were in the "out" group at this time to accuse the "in" group of corruption and malfeasance. (In a similar way that people today might accuse politicians of being too cozy with a particular corporate interest.) So while there is some possibility that James and George did in fact have sexual relations, I would take all this with a fairly sizeable grain of salt.
While more can be said about this subject, this previous thread may be of some help.