AFAIK the dash vent control with the the blue/red dots has no control of the heater valves, just blend between what is selected and outside air. If you are getting heat anywhere with A/C selected there is a problem with the heater control valves, they are open (ON/Heat) by default.

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1988 325is (purchased new) sold
2004 X5 3.0 2005 X3 2.5
2008 X5 3.0 (new to me)