Weird... my 1967 Amazon did that to me once, mainly because I couldn't quite figure out the levers.

It's the default for your AC to kick on when you have your defroster on (even back on the early 740s) you shouldn't have been able to switch it off/on.

I'd be inclined to agree with Klaus that these are unrelated issues.
In my limited P80 experience an evap code is usually the result of leak in teh fuel system either a failed J-hose hose back near the gas tank or a loose cap.

I'm not sure about the 850s, but I know the climate unit on a 1998 70-series has a self diagnostic that is activated when you put all the setting on auto and switch the ignition to KPII. You might check for that. It sounds like your car was re-circulating the cabin air.

My 98 also has a dash panel fresh air vent control - which can be opened or close to let in fresh exterior air. if you have this option, you might have had it open.

My 850 is a 94 and my C70 is a 98, so I'm not sure what your 96 has got for standard equipment.