Is this how the climate control is supposed to work?
 

I just looked through about 500 posts on climate control and heat and did not find anything mentioning this so here is the question:

Currently, AC works fine, got no heat. Fan is blowing normally. When on the max heat setting the air from the vents blows at the indicated fan speed although not hot when you select each vent setting and air is coming out of the correct vents for each setting. BUT when you hit the defrost button the fan goes to max and is blowing out the defrost vents and the center vent.

Any ideas what in the world is going on here?

All MB cars give 10% to the defrost at any setting to keep the windshield clean, When you hit the defrost the blower goes to max, that is normal too. The fact that you have no heat is likely not related, you are probably not getting any hot water to your interior coil. Trace your heat lines and check the valves, there is probaly an electric one, or even an auxillary pump on your car that supplies hot water to the heater coil. These are pretty common to goof up. Take a look at those and let us know if you can find the problem.
Good luck!

If you're not the original owner, you might want to check the coolant supply line to the heater core, which runs on the exhaust manifold side of the engine bay, to see if someone "bypassed" the heater core by blocking it off. If a previous owner didn't want to deal with a leaking core (requires dash removal), the alternative was to block it off for a later date with the repair shop.

If the car is the 190e in your signature then it has a vacuum operated heater valve in the cowl area. See if the vacuum is on it at all times. This is often rigged to stop the heater from messing with the AC. If it isn't rigged, then take the vacuum line off the valve and see if the arm moves. If it does and the hoses aren't rigged then you have a bad valve. They are dirt cheap so don't go to heroics to avoid replacing it.

Not sure if it is related but when I bought the car the Climate control was toast and the aux. water pump was inop. Replaced both items with new ones. Now water seems to be going to the core(the metal pipe is hot to the touch on the core side of the aux water pump so I am not sure about an obstruction. Will check the heater valve tommorrow and see what I come up with.

Kinda pisses me off hearing this cause I had the whole cowl area apart today replacing the fan motor with a new one and didn't think to check the heater valve.

You do know that the center vents are cold air only right? The outers and all others are for the warm side. So if you are doing these tests with center only open then that is why it is cold. Now the question is, if you are getting warm air when on defrost mode? Mine is acting funny as well, no matter how I set the knob I get cooler air, unless I select max heat or just under that on the dial. I am thinking mine is a bad temp sensor somewhere.