I'd get a MitiVac hand vac pump at the local autoparts store -- price varies from $35-45, and worth every penny.
Connect to the green plastic line in the engine compartment and see if it holds vac. If so, check for vac leaks up front (the check valve, at little blue and black plastic thing in the line -- may only be black) can crack and leak off the vac.
If not, you have either a leak or a bad pushbutton control unit. You can pull the PBC from the dash and check each servo by attaching the hand pump and seeing if they hold and operate. Much more work to replace bad ones, but at least you would know what works and doesn't.
It sounds to me like you have low vac or a bad AC servo. The system defaults to defrost if the vac fails or servo dies -- my 300 D had some bad vac actuators for the EGR and air recirc on the turbo, and the resultant vac leak caused my AC to blow mostly up the windsheild. Fixing the actuators repaired the AC.
Check all the vac lines in the engine compartment -- they are old enough now to have the rubber going bad. They either get rock hard (and leak) or soft and mushy, shedding black powder (and leak). There is also a vac reservior for the climate control, and the rubber bushing there can leak, too.
1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!