Maybe this will help:
When you try the different functions, does the air divert to the different vents for the different modes? Does everthing seem to function correctly except the temp wheel?
The reason for asking is to find out if the pushbutton controller seems to be functioning correctly. What usually happens on the controller is broken solder joints internally. If you are familiar with soldering circuitry, the repair usually involves opening the controller and looking for cracked solder joints where the boards meet in an "H" pattern. If not:
http://www.programainc.com/index.php
To check if the monovalve is closing as it should, place a meter (ohms) on the "ground" side of the connector and see if it varies at all while placing the pushbutton controller in different modes and varying the temp wheel. The pushbutton controller is part of controlling the ground side of the monovalve.
But before you take a lot of things apart, double check the fuses. If the W123 and W126 are similar for that year, a fuse basically powers the monovalve and the pushbutton controller and temp controller controls the ground side of the valve. The monovalve basically goes to full hot with no power.