Bob:
You should just about get frozen out of the car with the temp dial set
all the way down, as that turns off the re-heat. Fan speed will drop
off to next to nothing and air just barely above freezing will come out
the vents. This is normal behavior for a ACC unit, they all (GM, Ford,
Benz, Audi, Volvo) do the same thing.
I never move mine unless it's too hot or too cold -- the AC runs a
little cool in temperate weather and the heater tends to be a bit cool
in cold weather so I have a summer and winter setting, about 5 degrees
apart.
Don't set the blower on low, either, unless the fan is running full
blast too much, as the air flow will be VERY low in cold weather, maybe
even switched off on a 77, and you will freeze in the winter. Leave it
on auto.
If it won't cool well enough or the temp oscillates warm/cold at a mid
range setting, you need to replace the hose for the cabin temp sensor
aspirator motor, it's behind the glove box. The aspirator fan is on the
heater box, and pull air through a foam hose past the actual temp
sensor -- I think yours is in the dash somewhere. It's in the overhead
by the sunroof switch on the W126 and W124. If that hose falls apart,
the temp sensor will cause the car to get really cold, then switch on
the heat as the cold air finally get to it, then turn the AC on full
blast again when the hot air works in. Easy fix.
Peter