I've been under the dash and seen the plumbing you're talking about.
By the process of elimination it is beginning to sound like the A/C control unit.
The fan switch does not seem to have control of fan speed. Are you saying that the top button should make the fan blow high speed, no matter what? Sometimes it doesn't blow at all, regardless of what is selected.
I'll check the temp sensor and may have to go so far as the control board.
Thanks for the web site, always looking for more sources of info/understanding about my cars.
Although this is a new sort of problem, whenever I get into something I appreciate the engineering of the W123 more and more all the time.