My best guess is that the switch IS working since it turns the AC fan off. But like Tim said, there is a lever that moves in the location he says. The best way to find it is to turn the switch from the AC position to the non-AC position with the car OFF and listen and look at the same time. You should hear it move and you can probably see it. Assuming you don't have a vacuum leak, this should operate a few times with the engine off.

Unfortunately, my understanding is that replacement of the heater fan on a 114/115 is a difficult task.