This is quite typical of Euro cars that have auto climate control--YES, on Defrost, the temp will go to MAX heat and blower fan.
If the other positions (the "true" auto-control positions) tend to not give the desired temp (or don't match the temp wheel setting), then possibly the interior temp sensor is bad, or on an MB there is an "aspirator" system of some type, depending on the year/model. What this does is to "suck" air past the interior temp sensor to give a better sampling of the interior temp.
On some models this is done by a tiny fan built into the temp sensor, on other models the aspirator fan is in a remote location, such as behind the dash, and connects to the interior temp via a tube, and on others the tube is instead attached to the intake air side of the climate control, which will then draw air if the climate control fan is running. Sorry I don't know off the top of my head which system the late-126 chassis uses, I believe the remote-location blower behind the dash like a 124 chassis (the sensor itself is built into the domelight/sunroof switch area, the 4 or so small slots in that lamp assm.