Ah yes, the dreaded A/C out of the defrost. What has happened is your vacuum actuator that controls where the air goes has failed. Those clever Germans made it default to the defrost because in Germany, they use the defroster more than the A/C. Or so I am told that's why.
In any event, you need to replace the actuator. I don't remember if you can get at it by removing the glove box on a 126. On a 124 the whole dash has to come out. It's pretty common for them to fail around 10-12 years.
If your dash has to come out, do yourself a favor and replace them all. I think there's 4 or five that are hard to get to. The actuators are fairly cheap, $25-$35 each. Of course labor ain't. So I'm planning on tackling mine myself.
I did manage a "ghetto" way of keeping the air from blowing out the defroster. I went to Pep Boys and bought some black weather stripping and pressed it into the defrost vent. It doesn't divert the air out to the center vent, but at least your windshield won't fog up. Kind of ironic how it works just the opposite as in Germany.
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