I can't tell you what the problem might be, but it sounds like the dealership is pulling your chain. I've seen in the past there's a blend door, that would shift air from the evaporator to the heater core side of the HVAC box, I'd have to think it was something like that. Essentially when you make a change at the console, the door would move to shift the air flow, if that's not moving completely then it would lead to this kind of symptom.