I recently did a Milk Stout that turned out pretty good, so I'll give you a little feedback based on my experience.
My recipe used 1 lb of Black Patent, but you are starting with Dark LME while I did an all grain batch with a Maris Otter base malt, so your combination of 0.5 lb black patent with Dark LME could be comparable there. I've never used Dark LME though, so I'm not real sure what color and flavor that will add.
My recipe used 0.75 lb of Carmel 80L and 1 lb of lactose which is similar to what you plan to use. I don't think 1 lb of lactose in a 5 gal batch is too much, especially if you want something on the sweeter side. In my opinion the lactose added both sweetness and body to the beer.
I used one packet of S-04, sprinkled directly onto the wort without rehydrating and it seemed to ferment out fine. That method should work if you don't want to go to the trouble of making a starter.
Unfortunately I can't give you any advice on the cocoa powder. I made mine using cacao nibs in the secondary, which turned out great. I used 1 oz of nibs per gallon and aged for about 5 days in secondary before bottling.
Hope that helps, at least a little bit. Good luck, and let us know how it all turns out!
The Homebrew Nerd