Does your car have a recirc button above the ACC control panel? The symbol is something like 3 arrows end to end forming a circle. If you press it with the AC on, it'll stay in recirc for 30 mintues. If you press it with the heat on, it'll stay in recirc for 5 minutes. The ACC will also set the recirc mode based on internal calculations.

The acid test is to have create an odor at the base of the windshield and see if you can smell it in the cabin while the ACC is in recirc mode. If the odor is distinct in the cabin, the fresh air flap isn't closing.

I don't know where the actuators or fresh air flap are in a W124. They're right behind the glove box in a W126.

Sixto
95 S420
91 300SE
87 300SDL
83 300SD