I have a 2003 E320 and have had a lot of problems with the air condition and how it functions. The dealer has replaced damper controls and "some" computer this did make a big positive improvement but I still have an issue and the dealer states that it is working normally.
The first issue I have is the "automatic" control. The fan speed never drops below four lights and this makes the temperature of the cabin uncomfortable either too cold or too hot. Per the dealer it is normal that the fan speed never goes below four when in the automatic mode. Yes I can switch to manual mode but then for sure the cabin temperature will not be constant.
When running in the automatic mode if it is warm or hot outside the car I've discovered that I'm forced to turn both the driver and passenger temperature settings to 78 or both my wife and I are complaining that it is too cold. When it is cold outside the car I've discovered that I'm forced to set the temperature controls to 68 or lower otherwise the cabin temperature is too hot. In my opinion this is not normal. I don't have this problem with the temperature controls in my house. For as much as this car cost I expected much better control and response from the dealer.
I'd be interested in hearing from other 2003 owners.