There is a little fan that draws sample air through the grill that is near the rear view mirror. The fan is located in various places on different 124 models, but I think on yours it is behind and to the right of the glove box. It should run any time the ignition is on.
To test it, put smoke such as from a cigarette (yuk!) near the grill and see if it is drawn in. If not, search for the fan and fix or replace.