In My Hair: Nesting Or Preening?

I am part of an avian rescue group. We got our first foster bird on Sunday; a 4yr old (unknown gender) Hahn's Macaw. The surrendering home was a nurse and kept the bird in the basement for the last 3 years. Upon interaction, the bird seems very frightened of everything that enters it's cage. Actually, it is fearful in general. It doesn't like anything introduced to it, including toys. Step-up on a perch? No. It's terrifying. But it will step up on to my hand (most of the time, usually after some bluffing nips).
Once out of the cage, it is a completely different bird.
It seems happy to be out and interacting with me. It loves "pets" and will lower its head for me to give scritches. It could spend ALL day preening the side of my neck and my ears.
Yesterday, it discovered my hair. It was the first time I had my hair down (chest length). At first, I thought it was preening. But... Whenever it plays, it throws an absolute temper tantum whenever I ask to step up to remove the little one. It will bite my hand, HARD, and run away (in circles on my head) from a perch.
Thoughts?
Nesting?
Preening and now territorial?
What can I do to prevent this behavior?
It used to be completely content hanging out on my hand, arm and shoulder,- but now it beelines it for my hair and/or top of my head.

semi trusting......it takes more than a day to earn trust. Put your hair back up because it's a distraction. Work on the fundamentals get back to hand interaction, the hair is of course a non threat and can be introduced at any time, work on getting hand trust.

How do I work on hand trusting? Because when it does step-up onto my hand, it licks my hand, then runs up my arm to my shoulder and then into my hair.
It all happens to quickly...
Is there a good method to use to train the bird not to always bee-line it for my hair once it steps up onto my hand?

Why don't we assign them a gender? Seems a bit nicer to say he or she instead of "it" do they not have a name?

Step 1. Slow down, you've had them for 5 days including Sunday, to build trust takes time, sometimes well over a year. Now I assume you don't know anything other than they were kept in a basement for 3 years so assume they were abused. The fear of things entering the cage and especially sticks/perches screams to me that at least once they were hit. To be at a point where they step-up onto your hand is in short incredible. But you need to work at their pace not your own.

hold you arm in such a way that they can't run up to your hair, drop your elbow down so they cannot run up, they may try to hop over to your shoulder but you give a firm non-shouting "no" and get them onto your hand again.

The birds' name is Pickles. However, we are considering adopting it and would change the name. The bird is 6 (as we found out yesterday at the vet from the leg band on it) The little one doesn't talk, and with little interaction, we believed choosing a new name would be acceptable at this point.
I know it sounds harsh calling the bird an "it" We did have a DNA test done yesterday to discover the gender. Should have that back in a week.

I think you're right. The more time I spend with Pickles, the more responding he is to stepping up on my hand. For being locked in a basement over half its life, he really does seem quite calm. He steps up 9 times out of 10, going slower the better. For only having the bird less than a week, he really has come out of his shell.

I will ask this though - although I can now (for the most part) get him to step-up on my hand from inside the cage- the little guy is still terribly frightened to play with anything. Any toys I wish to introduce, or try to play with- he literally revolts backwards (legs planted but body swings back like "don't let that touch me") He won't sit on a play perch. Any ideas on how to keep the enrichment going if he shows no interest in wanting to shred or play?

Also- he refuses to eat any fresh produce. I made headway with apples and the occasional grape last night, but he will not eat bananas, carrots, snap peas, mango, or strawberries. His previous owner had him on a poor diet. Mostly seed based parakeet food; heavy on the sunflower and safflower. Which he loves. along with peanuts. All the bad things... Any ideas on how to introduce a healthier diet? He did eat a little bit of egg and a pasta wheel.

Aw I quite like Pickle!

yep those foods all sound very familiar. Funny thing is my conure never cared much for banana. For food try eating a little bit you prepared then break some off and offer it, if you make him step up for it and offer as a treat it may go down even better

as for the toys he's clearly nervous of new things in general which is fair, you never know that little jingly ball may suddenly eat him, you never know! The simplest solution I've seen is to play yourself! Balls are the easiest as despite us all being adults we can all admit playing with a ball is kind of amusing. Try to sort of hide it from him, like you don't want him to know you've got it, but make sure it looks like you're having fun with it making lots of excited noises and rolling it around a lot. Do the same for any toy and slowly curiosity may take hold

Also let him become desensitised to toys, so start a toy off a distance from the cage, then after a couple days move it a bit closer until he shows any signs of being unnerved, then leave again until he's okay with it, then closer, then eventually it'll be on the outside of the cage where he may go inspect it, if he plays with it or becomes comfortable with it then you can put it inside and see if he enjoys it. It's all a case of proving in his eyes that those things aren't going to hurt him