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The A/C is unfortunately normal.
What's happening is that when recirc is off, it draws fresh air from under the hood on the passenger side. Depending on what's going on, it may be getting hot air. When your engine is cold it's fine, and there's certain speeds where there is sufficient airflow, but normally the hot air from the engine bay is just going into the intake. Some members have had some amount of success by putting additional weatherstrip seals in front of the HVAC intake to isolate it from the engine bay.
There's also a claim going around that the HVAC 'remembers' the temperature it was on when you turn it off, so if you have the heat on, no recirc, and turn it off, it will continue to allow hot air in. But I haven't verified that.
Fogging up is pretty normal when you're blowing in some warm air.
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