Will that dial control whether AC turns on/off as well?
I am going to give it a go again with the AC button, I really think if the AC is turned off, it should be off...
That dial will control the temperature of the air it's blowing out of the dash vents.
If you don't want cold air blowing out of the dash vents, don't set it to blow cold air out of the dash vents.
Leave the AC on (let it sort out whether it needs to be running or not at any given time) and set the dash dial to the middle (or slightly warmer if you prefer) and it'll be exactly what you want.