DUOVALVE!
bought new duovalve from Merc dealership $330. ouch!. replaced duovalve in about 45 minutes. started the car and felt cold air all around. problem solved. thanks to everyone who contributed to this thread.
I had to top up the coolant after the duovalve replacement - but i couldnt find a purge nipple to bleed the system. engine coolant temperature is flactuating between 90 and 100 degrees - so i suspect that there are some air pockets. Does anyone know how to bleed the system or can someone reply with a link to a good diy article. i tried searching but i am getting conflicting info - some claim the system is self bleeding, some claim that there is bleed nipple somewhere. the manual that i bought does not discuss bleeding the system.