by "dials in the blue" i presume you mean the heater control dial? This sounds like a classic example of the very common heater control valve (HCV) failure. They fail so often its untrue, and the last one that failed on me casued a blockage in the coolant flow - meaning overheated. It falls in line with what your saying too, as it controls the coolant flow into the heater matrix - so if it was messing around when ur telling it to be cold in the car it was opening and malking it hot in the car.....

Matt