Compressor is OK and it blows fine but air is not cold. What should we look into? thanks!

A year and model would help - a lot.

When the compressor engages, does the condenser get warm/hot? Can you see freon in the sightglass?

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It is a truism that almost any sect, cult, or religion will legislate its creed into law if it acquires the political power to do so. Robert A. Heinlein


09 Jetta TDI
1985 300D

you can look into the sight glass with every thing turned on(air)if you see bubbles,tell her I said hi,no really now,if you see bubbles it is a sign of low charge,if no bubbles it may be empty or fully charged,if empty the clutch should not be engaged,this would mean no cooling.
The best way to be sure about it is to find a Friend that can put gages on the system,this way you are sure of the Freon in the system,just -n-time

sorry - it's a 1984 300 TD and doesn't seem to have a leak.

Most of the older cars are hard to find any kind of leak....They just seep a little until the charge is weak enough to not cool. Unless you want it for winter, I would wait until next spring to recharge it.
The debate is real hot on what refrigerant to use so I won't go there. Your system was designed for R12.

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The guessing game could go on and on. To begin, you should hook up a manifold gauge to verify charge and pressures. The system could simply be low on refrigerant. This may trip the low pressure switch, which is there to protect the compressor from being damaged by running undercharged. Without any empirical data, it's anyone's guess...

My 91 300E has such a slow leak that I just top it off with a can or two of R12 each year (depending on the length of the heat season here in TX). If I let the charge go low enough, the compressor will eventually fail to engage, at which point the system will blow hot air.

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08 W251 R350
97 W210 E320
91 W124 300E
86 W126 560SEL
85 W126 380SE Silver
85 W126 380SE Cranberry
79 W123 250
78 W123 280E
75 W114 280

leaks in ac systems are hard to find and are common, go to an ac specialist he will do a leak test, ususally bu putting some dye and gas in the system.

he will then ask you to go back in a week and he will chech with a UV light fo signs of dye leaking from the sytem, leaks are easliy detected this way,

But again, you need to verify that there actually is a leak. There may not be. As mentioned before, the easiest way to figure this out, in the absence of a sniffer or UV dye, is with manifold gauges.

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08 W251 R350
97 W210 E320
91 W124 300E
86 W126 560SEL
85 W126 380SE Silver
85 W126 380SE Cranberry
79 W123 250
78 W123 280E
75 W114 280

Why do you think the compressor is OK? Do you see and hear it engage? Even if you do, how do you know it is actually compressing? Flow in the sight glass might indicate some sort of compressor function, but it will not tell you how many PSI is being put out. The only way to find out for sure is by hooking up a set of manifold gauges.

What makes you say this? Either there is a leak or there isn't. There's no in between. And the only way to find out for sure is with a sniffer or, to a lesser degree, with UV dye. Judging by your questions, you probably don't have either of these. Use of borrowed or rented manifold gauges is the cheapest and easiest way to at least determine if there is enough refrigerant in the system to allow the compressor to activate.

__________________
08 W251 R350
97 W210 E320
91 W124 300E
86 W126 560SEL
85 W126 380SE Silver
85 W126 380SE Cranberry
79 W123 250
78 W123 280E
75 W114 280