306 heating problem

1994 306 xrd. I have noticed that when the hot air is turned on there is smell similar to engine coolant in the cabin. Also heat + defog completely mists up the windscreen when driving, turning the heat off and blasting cold air starts to clear the mist up. I guess there is coolant leak inside the cabin hence the smell and fogging problem. The problem *must* be the heater matrix as this is the only place coolant is entered in the cabin. even the pipe connection to the matrix is on the engine side of the bulkhead so cannot be leaking there.

Is my diagnosis right???

earl