I'm having a similar problem with my X5. When I turn on the A/C I only get cool air through the middle vents. If I set it to top or footwell vents, it blows strictly HOT air. Even if I leave the IHKA on Auto, it will blow cool air through the middle vents and hot air from both the top and bottom vents. Could this heater divert valve be the issue? I also replaced the FSR but seeing Weasel's comments that obviously wasn't the problem.

Edit: I think I'm answering my own question here. I found this thread on the issue and I'm almost positive that gunk in the antifreeze messed up the valves and kept them open. Heater control valve ? - bimmerfest - BMW Forums
It all seem plausible now that I found out the coolant hasn't been flushed in 55,000 miles. What do you guys think? Could it be anything else?