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The drains go straight down out the bottom of the HVAC housing, through the transmission tunnel, and onto the transmission itself. There are two drains, one each on the passenger and driver side.
I've attached a photo showing a 124 wagon with the dash and hvac housing removed. The red arrows indicate the drain holes through the transmission tunnel. For reference, the gold box rear of the drains (it's the accelerometer for the airbag) sits directly below the radio in a fully assembled car.
Good luck,
- JimY
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